GBP/USD aims to recapture 1.2400 on positive market mood, US inflation sees lower at 8.1%
|- GBP/USD is marching towards 1.2400 as the risk-on mood has underpinned risk-sensitive assets.
- The underperformance of BRC Like-for-Like Retail Sales did a negligible impact on pound.
- A higher US inflation print may bring more uncertainty in the FX domain.
The GBP/USD pair is oscillating in a broad range of 1.2260-1.2406 since Thursday. A tad longer consolidation after an intense sell-off is advocating inventory distribution in which the institutional investors shift their inventory to the retail participants. The signs of exhaustion are clearly visible and eventually, a bullish reversal could take place going forward.
Earlier, the market participants were expecting that last week’s interest rate announcement by the Federal Reserve (Fed) will mark a reversal in the FX domain. Risk-perceived assets will regain glory and the US dollar index (DXY) will start easing after a juggernaut rally. However, the consecutive schedule of major events such as Friday’s US Nonfarm Payrolls (NFP) and upcoming US inflation has postponed the reversal in the FX domain.
Investors should be aware of the fact that the DXY could continue its power-packed performance in case the US inflation numbers deviate on the negative side. The US inflation is seen at 8.1%, lower than the prior print of 8.5%. In case it releases higher than the estimates and prior figures, then the odds of a 75 basis point (bps) interest rate hike will get strengthened further.
On the sterling front, the British Retail Consortium (BRC) has reported the Like-For-Like Retail Sales in the Asian session. The Like-For-Like Retail Sales landed at -1.7% lower than the estimates of -1.6% and the prior print of -0.4%. A lower reading is generally considered negative for the pound bulls.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.