16 February 2024, GBP/USD
Events to watch out for today:
09:00 EET GBP - Retail Sales m/m
15:30 EET USD - PPI m/m
GBPUSD:
The GBP/USD pair is facing difficulty in surpassing the 1.2600 level and gaining momentum. During the Asian session on Friday, there was some selling pressure. Currently, spot prices are trading at around 1.2585, which is a decrease of less than 0.10% for the day. The pair is experiencing modest weekly losses.
Thursday's UK GDP report confirmed a technical recession. This, along with softer UK consumer inflation data released on Wednesday, confirmed speculation that the Bank of England (BoE) will soon begin cutting interest rates. As a result, the British Pound (GBP) is facing headwinds and the GBP/USD pair's recovery from a weekly trough is being held back by modest gains in the US Dollar (USD).
However, the resurgence of bets on an imminent rate cut by the Federal Reserve (Fed) could act as a headwind. The weaker US retail sales report published on Thursday indicates a cooling economy and should allow the Fed to begin easing monetary policy by June. The recent increase in US Treasury bond yields has been a significant factor in supporting the US Dollar. This, in turn, could lead to a decline in US bond yields and the US dollar.
Furthermore, the optimistic sentiment in the stock markets may prevent the safe-haven US Dollar from gaining strength and restrict any potential losses for GBP/USD. From a technical standpoint, the recent failures to confirm a bearish trend below the 100-day simple moving average (SMA) suggest that traders should be cautious and avoid taking aggressive positions in anticipation of further short-term declines for this currency pair.
Market participants are eagerly awaiting the release of UK retail sales data, which could impact the Pound's price momentum and provide fresh impetus to the GBP/USD pair. Later, during the early North American session, traders will focus on the US macroeconomic data - Producer Price Index (PPI).
Trade recommendation: Trade predominantly on Buy from current values
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