Jul 22, 2022 02:14AM ET
By: AnalysisWatch
GBP/USD pays little attention to the UK retail sales data for June and holds near the intraday low after the release of the data. Nonetheless, the pair drops to new daily lows around 1.1960 ahead of the London open on Friday.
UK retail sales rose by more than the expected -0.3% and by 0.8% compared to -0.1% in the previous month. The core version of the key UK data, retail sales excluding motor fuels, reversed the market consensus of -0.4% and the prior reading of -0.1% into positive numbers of 0.4%.
The cable pair's inaction despite the mostly firmer UK data may be related to the market's cautious sentiment ahead of the preliminary US S&P Global PMIs for July and the Federal Open Market Committee (FOMC) meeting next week. In addition, market intervention in Hong Kong and fears of a slowdown in Chinese GDP growth in 2022 voiced by the Asian Development Bank (ADB) are also exerting downward pressure on GBP/USD prices due to trade relations with Beijing.
It is also worth noting that political gridlock in the UK due to the Tory leader's final announcement due in September is also putting downward pressure on GBP/USD prices. In addition, the European Union's (EU) distaste for Foreign Secretary Liz Truss due to her role in Brexit poses challenges for the pair's traders, as ex-Chancellor Rishi Sunak has little support due to his opposition to tax cuts.
Moving forward, GBP/USD traders will want to pay attention to the S & P Global PMIs for the UK for July.
If the UK economic data is weak, the currency pair could continue its recent weekly bounce. However, the odds are in favor of the hawkish Fed and further weakness in the cable pair due to the safe-haven status of the U.S. dollar.