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- GBP/USD edges up as weak US Retail Sales pressure Dollar.
- Consumer sentiment drops, reinforcing Fed hold bets for September.
- UK GDP strength shifts focus to inflation and jobs data.
The Pound Sterling rises by some 0.40% on Friday as a batch of US data justifies the Fed’s dovish approach, with consumer sentiment deteriorating while the disinflation process improved. The GBP/USD trades at 1.3545 after bouncing off daily lows of 1.3482.
GBP/USD climbs as soft US spending and sentiment boost Fed hold bets
In the week, GBP/USD is poised to finish the week in the green. The US Dollar Index (DXY), which measures the buck’s performance against six currencies, is down 0.40% to 99.54, set to end near weekly lows as traders priced out Fed interest rate hikes.
US July Retail Sales snapped nine months of straight gains, declining 0.6%, below forecasts for a 0.1% increase. Sales in the control group, used in the calculation of the Gross Domestic Product (GDP), dropped as well by -0.4%, after registering a 0.4% growth in June, according to the US Commerce Department.
The University of Michigan Consumer Sentiment, in its preliminary August reading, deteriorated as households remained concerned about elevated prices. The index fell from 55.2 in July to 51.0, snapping two straight months of improvement. Inflation expectations for the next 12 months rose from 4.2% to 4.3%, while expectations for 5 years remained unchanged at 3.3%.
After the data, money markets expect the Fed to hold rates unchanged, with odds at 70% and the chance of a rate hike at 30%, as depicted by Prime Terminal.
In the UK, the weekly economic schedule was anaemic, except for the release of Gross Domestic Product (GDP) figures, which showed that the economy expanded at a 0.3% pace in June, the strongest among G7 developed countries.
Next week, the UK schedule will feature inflation and employment data, as well as Retail Sales. In the US, housing data, the ADP Employment Change 4-week average, jobless claims and Flash PMIs.
GBP/USD Price Forecast: Technical Outlook
In the daily chart, GBP/USD trades at 1.3549, extending its recovery above the key simple moving averages cluster around 1.3374 and former trend-line caps at 1.3423 and 1.3508, which now underpin the bullish near-term bias. The pair holds comfortably over these reclaimed supports while the Relative Strength Index (14) at 63.9 leans toward overbought territory, suggesting upward momentum remains constructive but increasingly stretched.
On the downside, immediate support is located at the recent breakout area near 1.3508, followed by the former downward resistance trend-line level at 1.3423 and the triple simple moving average region around 1.3374, with an additional structural floor at 1.3342 reinforcing the broader base. On the topside, the rising support trend line turned barrier at 1.3590 marks the next resistance to beat; a sustained move above this level would open the door to further gains, while failure to clear it may trigger a corrective pullback toward the 1.3508 zone.
