- US retail sales posted their biggest gains in eight months, boosting the dollar.
- UK inflation data and Bank of England spokespeople kept the pound from falling.
- GBPUSD Price Analysis: Once it breaks 1.2029, it could test the 200 DMA; otherwise it could drop to 1.1647.
GBPUSD rose after the release of mixed US economic data, while a number of Bank of England (BoE) governors also reported UK CPI. At time of writing, GBPUSD is trading at 1.1888, posting gains of 0.16% after hitting a daily high of 1.1941.
US Retail Sales showed consumer spending increased
US stocks are trading in the red following a strong US retail sales report. The US Department of Commerce reported that sales registered the highest growth in eight months, reading 1.3% month-on-month versus 1% estimated by analysts. Digging deeper into the report, Retail Sales for the control group, used to calculate Gross Domestic Product (GDP), grew 0.7% MoM vs. 0.3% expected.
While US inflation data showed signs that an era of high prices may be ending, consumer resistance proves otherwise. Instead, Federal Reserve officials may be forced to continue their aggressive tightening, although they expressed a desire to slow the pace of tightening conditions.
Other US data revealed during the day was that Industrial Production (IP) plunged from 0.1% in September to -0.1%m/m, below estimates for a 0.2% increase.
Lately, two officials from the Federal Reserve (Fed) made statements. The president of the New York Fed, John Williams, affirmed that price stability is essential for the proper functioning of the US economy. Later, San Francisco Fed President Mary Daly said the central bank wants the economy to slow down, so it can bring inflation down. She added that “pausing is not part of the discussion” and expects the Federal Funds rate (FFR) to top out at around 4.75%-5.25%.
UK inflation breaks above 11%, putting pressure on the BoE
In the UK, the October Consumer Price Index rose 11.1% year-on-year, beating estimates of 10.7%, the Office for National Statistics (ONS) reported. The inflation report is released a day before Foreign Minister Jeremy Hunt is due to present the fall budget, which is expected to show a “fiscally responsible” government under new Prime Minister Rishi Sunak.
Following the release of the UK inflation report, Bank of England Governor Andrew Baily reported that inflation is reflecting a series of supply shocks. However, he added that those shocks are starting to wear off and noted that the central bank will raise rates further. Meanwhile, Swati Dhingra, a new BOE member, said the UK could enter a much deeper recession if rates continue to rise.
After a very tight economic schedule, GBPUSD continued its bullish trend, albeit stalling around 1.1900. The main bias is neutral to bullish, although if it recaptures the 200-day EMA at 1.2237, that could pave the way for further gains.
GBPUSD Price Analysis: Technical Perspective
From a technical point of view, the GBPUSD’s inability to recover 1.2000 exposes the pair to selling pressure. Although the Relative Strength Index (RSI) shows momentum from the buyers, the November 15 inverted hammer candlestick with a long upper shadow showed signs of some selloffs. However, further momentum above the weekly high at 1.2029 could encourage buyers to participate in GBPUSD’s run towards the 200 day EMA. Elsewhere, GBPUSD key support levels are 1.1800, followed by the 100-day EMA at 1.1647.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
