Title: GBP/USD faces barricades around 1.1850 as DXY eyes rebound ahead of US Retail Sales
July 15, 2022 12:01 AM ET
The GBP/USD pair slipped to the vicinity of 1.1830 after trading just above 1.1850 in the Asian session.
After a less confident recovery from Thursday's low at 1.1760, the currency pair showed a subdued performance. Usually, a slight recovery quickly turns into a downward movement as market participants consider this trade a bargain.
Cable is expected to see a steep decline after slipping below the temporary support of 1.1820, as the US Dollar Index (DXY) is expected to rebound after a slight correction. The DXY posted a steep decline on Thursday after hitting a fresh 19-year high of 109.26. A rebound is expected amid higher consensus readings for U.S. retail sales.
U.S. retail sales are expected to come in at 0.8% for June, up from the previous release of -0.3%. Fuel prices have now slipped into bearish territory, but remained extremely solid in June. Therefore, higher energy costs are likely responsible for the higher consensus economic data. Also, higher Consumer Price Index (CPI) data released on Wednesday is enough to boost retail sales forecasts.
As for the pound, political instability and recession fears have kept pound bulls on edge. The resignation of British Prime Minister Boris Johnson has weakened household confidence in the economy's growth prospects. High inflation has also sparked recession fears. Further rate hikes by the Bank of England (BOE) are still expected, and it would be interesting to see if economic catalysts would support the BOE in tightening policy without hesitation.