- GBP/USD undergoes an intraday swing and is down almost 100 pips from the daily high.
- The dollar remains close to the monthly high and turns out to be a key factor putting pressure on it.
- US retail sales fail to provide any lift as attention turns to the FOMC minutes.
The pair GBP/USD extends its intraday decline from around 1.2150 and continues to lose ground during the early American session. The pair falls to the 1.2050-1.2045 zone, a new daily low in the last hour, reversing a significant part of the overnight recovery gains from the monthly low.
The US dollar regains some positive traction and is again close to its highest level since the end of July, reached the previous day. This dwarfs the UK’s higher-than-expected consumer inflation figures and attracts fresh selling around the GBP/USD pair. Expectations that the Federal Reserve will maintain its tightening policy, coupled with a further rise in US Treasury yields and risk aversion momentum, continue to support the safe-haven dollar.
The dollar maintains its modest intraday gains after the US Census Bureau reported that US retail sales were flat in July, disappointing expectations for a modest 0.1% increase. However, the slight disappointment was largely offset by unexpected sales growth excluding autos, which were up 0.4% during the reported month. Additionally, Control Group sales rose 0.8% during the month in question, versus consensus estimates for a 0.6% rise.
The data could have raised bets for a further Fed rate hike at the September meeting, which continues to support elevated US Treasury yields. However, traders appear reluctant to make aggressive bets, preferring to wait for the FOMC meeting minutes, due later in the US session. This, in turn, suggests that the GBP/USD pair is more likely to find decent support and stop the intraday decline near the 1.2000 pivot support.
Technical levels
Source: Fx Street
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