- GBP/USD has fallen to fresh weekly lows in the 1.3550s and is now below its 21DMA.
- Downbeat global risk appetite and weak UK data have weighed on the pair on Friday.
GBP/USD broke out to fresh weekly lows on Friday and has continued to press lower as the US trading session has gotten underway, with sterling succumbing to weak data and risk-off flows that are weighing broadly on risk-sensitive G10 currencies. At current levels just above the 1.3550 mark, GBP/USD now trades about 0.3% lower on the day, taking on the week losses to about 0.9%. With the latest drop having taken the pair back below the 21-day moving average for the first time since this time last month, the sterling bulls will be concerned that GBP’s near-term momentum has turned negative. The main area of support for cable traders to now keep an eye on is at the 1.3500 level.
Global equities tumbled on the final trading day of the week with traders citing the usual concerns about Fed tightening as well as week Netflix earnings, and this has dragged other risk assets (like commodities) and bond yields lower in tandem. This has hurt sentiment towards the more risk-sensitive currencies in the G10 such as sterling, which has also suffered after a larger than expected drop in Retail Sales in December. Data released by the UK’s ONS on Friday showed that headline Retail Sales dropped 3.7% MoM, much larger than expectations for a 0.6% MoM decline.
“The December retail sales report is unequivocally bad news, and it's reasonably clear that elevated price pressures in the goods sector contributed to the retrenchment in spending,” analysts at BMO said. Meanwhile, should next week’s Fed meeting match or exceed expectations regarding hawkishness, that could be a recipe for broad USD strength and for cable to incur further losses. A drop back to 1.3400, where the 50DMA resides, looks increasingly on the cards. Markets continue to price in a strong likelihood that the BoE hikes interest rates again at its next meeting, with BoE speak this week not doing anything to dampen such speculation, but the next meeting isn't until February 3 (just under two weeks away).
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Recommended content
Editors’ Picks
EUR/USD stays below 1.1100, looks to post weekly losses
EUR/USD continues to trade in a narrow range below 1.1100 and remains on track to end the week in negative territory. Earlier in the day, monthly PCE inflation data from the US came in line with the market expectation, failing to trigger a reaction.
GBP/USD struggles to find a foothold, trades near 1.3150
GBP/USD stays on the back foot and trades in negative territory at around 1.3150 on Friday. The US Dollar holds its ground following the July PCE inflation data and doesn't allow the pair to stage a rebound heading into the weekend.
Gold retreats toward $2,500 ahead of the weekend
Gold stays under modest bearish pressure and declines toward $2,500 in the American session on Friday. The 10-year US Treasury bond yield edges higher toward 3.9% after US PCE inflation data, causing XAU/USD to stretch lower.
Week ahead – Investors brace for NFP amid Fed rate cut speculation
Here comes another NFP week, with investors eagerly awaiting the results as they try to discern the size and pace of the Fed’s forthcoming rate cuts. The weaker than expected July numbers triggered market turbulence, instilling fears about a potential recession in the US.
Easing Eurozone inflation to back an ECB rate cut in September Premium
Eurostat will publish the preliminary estimate of the August Eurozone Harmonized Index of Consumer Prices on Friday, and the anticipated outcome will back up the case for another European Central Bank interest rate cut when policymakers meet in September.
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.