- The Pound Sterling remains under pressure but it could rebound as market participants reassess the BoE rate cut path.
- Unexpectedly strong UK Retail Sales data for September could dampen expectations that the BoE will opt for large interest-rate cuts.
- Kamala Harris leads by a slight margin in national polls against Donald Trump in US presidential elections.
The Pound Sterling (GBP) drops to near 1.3020 against the US Dollar (USD) in Monday’s London session. The GBP/USD pair stays under pressure as the US Dollar resumes its upside journey after a slight correction on Friday. The Greenback gains on expectations that the policy-easing cycle from the Federal Reserve (Fed) will be more gradual than previously expected.
According to the CME FedWatch tool, 30-day Federal Funds futures pricing data shows that the Fed will lower rates by 50 basis points (bps) in the remaining year, suggesting that the US central bank will cut its borrowing rates by 25 bps both in November and December. The Fed seems to follow a moderate policy-easing cycle as a string of upbeat United States (US) data for September has diminished risks of an economic slowdown.
However, Atlanta Fed Bank President Raphael Bostic said on Friday that he sees only one interest rate cut in the remaining two meetings this year. Bostic added that he sees the federal funds rate heading between 3% and 3.5% at the end of 2025, but that he is not in a rush to reach this neutral level.
Meanwhile, the immediate reaction in the US Dollar will be guided by how speculation over US presidential elections will shape going forward. Currently, Vice President Kamala Harris is running ahead of former President Donald Trump in national polls, according to the Emerson College’s poll.
Daily digest market movers: Pound Sterling remains under pressure
- The Pound Sterling weakens slightly against its major peers at the start of the week. The British currency, which has suffered in the past weeks on the broad assessment that the Bank of England (BoE) will cut interest rates aggressively, could now be facing a different scenario after the release of strong United Kingdom (UK) Retail Sales data for September.
- The Retail Sales data, a key measure for consumer spending, surprisingly rose by 0.3% month-over-month. Economists had projected a decline in the consumer spending measure at a similar pace.
- Before the UK Retail Sales data, traders started pricing in the BoE to cut interest rates in both the policy meetings remaining this year amid slowing inflation. However, upbeat Retail Sales data is expected to weigh on bets supporting the BoE to cut its key borrowing rates in December.
- For more guidance on interest rates, investors will pay close attention to speeches from BoE Governor Andrew Bailey, Governor Sarah Breeden, and policymaker Megan Greene on Tuesday. Bailey will speak several times during the week.
- On the economic front, investors will focus on the preliminary S&P Global/CIPS Composite Purchasing Managers’ Index (PMI) data for October, which will be published on Thursday. The overall business activity is expected to have expanded at a slower pace.
British Pound PRICE Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.17% | 0.21% | 0.24% | 0.05% | 0.34% | 0.25% | -0.04% | |
| EUR | -0.17% | -0.03% | 0.00% | -0.06% | 0.13% | -0.03% | -0.29% | |
| GBP | -0.21% | 0.03% | 0.02% | -0.15% | 0.15% | 0.04% | -0.30% | |
| JPY | -0.24% | 0.00% | -0.02% | -0.21% | 0.10% | 0.05% | -0.35% | |
| CAD | -0.05% | 0.06% | 0.15% | 0.21% | 0.21% | 0.26% | -0.22% | |
| AUD | -0.34% | -0.13% | -0.15% | -0.10% | -0.21% | -0.03% | -0.46% | |
| NZD | -0.25% | 0.03% | -0.04% | -0.05% | -0.26% | 0.03% | -0.34% | |
| CHF | 0.04% | 0.29% | 0.30% | 0.35% | 0.22% | 0.46% | 0.34% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
Technical Analysis: Pound Sterling holds the immediate support of 1.3000
The Pound Sterling trades at make or a break near the psychological support of 1.3000 in European trading hours. The near-term outlook of the GBP/USD remains bearish as it hovers below the 50-day Exponential Moving Average (EMA), which trades around 1.3090.
The 14-day Relative Strength Index (RSI) hovers near 40.00. A breakdown will the same will strengthen the bearish momentum.
Looking down, the upward-sloping trendline drawn from the April 22 low at 1.2300 will be a major support zone for Pound Sterling bulls near 1.2920. On the upside, the Cable will face resistance near the 20-day EMA around 1.3110.
Economic Indicator
Retail Sales (MoM)
The Retail Sales data, released by the Office for National Statistics on a monthly basis, measures the volume of sales of goods by retailers in Great Britain directly to end customers. Changes in Retail Sales are widely followed as an indicator of consumer spending. Percent changes reflect the rate of changes in such sales, with the MoM reading comparing sales volumes in the reference month with the previous month. Generally, a high reading is seen as bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.
Read more.Last release: Fri Oct 18, 2024 06:00
Frequency: Monthly
Actual: 0.3%
Consensus: -0.3%
Previous: 1%
Source: Office for National Statistics
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