GBP/USD edges lower, markets eye UK retail sales - MarketPulse

GBP/USD edges lower, markets eye UK retail sales – MarketPulse

  • UK retail sales expected to fall sharply
  • US debt ceiling impasse continues
  • FOMC minutes show Fed divided over rate policy

GBP/USD continues its downswing. The pound is trading at 1.2340, down 0.20% and is at a one-month low against the US dollar.

The UK releases retail sales for April on Friday. On an annualized basis, the headline and core readings are expected to decline by 2.8% in April, which would indicate that UK consumers continue to hold tight onto the purse strings. Consumers are having a tough time with the cost of living crisis, with inflation at 8.3% and a weak reading could weigh on the pound.

US debt ceiling still unresolved

The US debt ceiling impasse remains unresolved, with the White House warning that the US could default on its debt on June 1st if no deal is reached in Congress. The markets are jittery and US 10-year Treasury yields have jumped to 3.75, up 1.1% today. The US dollar has also benefited from the debt ceiling crisis as investors have snapped up safe-haven assets. On Wednesday, Fitch Ratings put the top-ranked United States sovereign credit rating on “rating watch negative” due to the danger of a US debt ceiling default and we can expect market risk sentiment to continue falling as we move closer to June without a deal in place.

Fed uncertain about rate outlook

The FOMC minutes indicated that the Fed remains unclear over future rate policy. At the May meeting, some members said there was a need for further increases as inflation was not falling fast enough. Other members argued that the economy was cooling and there was no need for more tightening. All the members agreed that inflation remains too high and the vote to raise rates by 25 basis points at the May meeting was unanimous.

So what’s next? The Fed meets on June 14th and appears to be leaning towards a pause in rate increases. The odds of a pause are currently 62%, versus 37% for a 25-bp hike, according to CME’s FedWatch. Just a month ago, the probabilities were 70% for a pause, 8% for a 25-bp hike and 22% chance for a rate cut of 25 basis points. A hawkish Fed and solid US data have put to rest market speculation of a rate cut next month.

Speaking of solid economic data, US Preliminary GDP rose 1.3% y/y in the first quarter, up from 1.3% in Q4 2020, which was also the estimate. On a quarterly basis, GDP climbed 4.2%, above the estimate of 4.0% and after a Q4 gain of 4.0%. Unemployment claims rose to 229,000, following a previous reading of 225,000, which was downwardly revised from 242,000. This easily beat the estimate of 245,000. The Fed will not be thrilled with these numbers, as it needs the economy to cool in order to wrap up the current rate-tightening cycle.


GBP/USD Technical

  • GBP/USD tested support at 1.2375 in the European session. Below, there is support at 1.2307
  • 1.2461 and 1.2529 are the next resistance levels

GBP/USD edges lower, markets eye UK retail sales - MarketPulse PlatoAiStream Data Intelligence. Vertical Search. Ai.

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at Visit to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Kenny Fisher

A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher
Kenny Fisher

Latest posts by Kenny Fisher (see all)

Time Stamp:

More from MarketPulse