GBP/USD Price Analysis: Failed to Boost Above 1.35 Despite Retail Sales, BoE
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- GBP/USD remains supported amid BoE rate hike bets.
- Fundamental data shows signs of recovery from the pandemic.
- Consumer confidence and the jobs market have appeared with progressive signs.
- Fedspeak and ECB are further eyed for fresh stimulus.
The GBP/USD price analysis is mixed as the pair attempted to rise and pared losses partially but remained under pressure below 1.3500.
Sterling hit a new weekly high against the dollar on Thursday, continuing its gains from the previous day. Despite the dry UK economic calendar, the British currency was supported by the records released earlier this week.
GBP/USD fell more than 90 pips below 1.35 even though the investors expect the Bank of England (BoE) to raise interest rates to fight inflation, propping up the pound as a result.
Amid rising inflation and improving economic data, the UK currency strengthened this week, leading to speculation that the Bank of England will be the first major central bank to hike rates following the Covid-19 pandemic.
On Tuesday, data showed the UK labor market ended the government’s health and safety leave program, which eased concerns about the risks of monetary tightening and raised expectations about interest rates.
Consumer confidence in the UK improved in November, according to new data released yesterday.
Despite falling for three months in a row, GfK’s consumer confidence barometer rose to minus 14 this month from minus 17 in October.
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Joe Staton, Director Client Strategy at GfK, said: “It’s no wonder that household finances have deteriorated this month despite decades of high inflation, rising prices, and concerns about rising interest rates.”
The GBP/USD exchange rate rose to 1.35 this morning thanks to positive UK economic data.
Official figures from the Office for National Statistics show that UK retail sales rose for the first time in six months, driven by soaring Christmas spending on toys and clothing.
Retail sales in the UK rose 0.8% in October, beating economists’ expectations of a 0.5% increase.
This was also true in the United States, where rising inflation and expectations of tighter monetary policy by the Federal Reserve System drove the dollar higher.
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Due to rising inflation, investors expect the Fed to accelerate its bond-buying program and hike rates more aggressively than expected.
Both Christopher J. Waller and Richard H. Clarida deliver speeches at the end of the week. In light of the Federal Reserve’s monetary policy action, investors will watch the updates.
GBP/USD price technical analysis: Bears holding strong under 1.35
The GBP/USD price fell below the 20-period SMA on the 4-hour chart. The fall seems like a top reversal pattern with a very high volume. We may expect a further decline to the 1.3400 area ahead of testing the multi-month lows around 1.3330. However, the pair may continue its upside journey if it sustains above the 1.3450 area and regains 1.3500.
