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Title: GBP/USD slides below 1.1200 on downbeat UK Retail Sales, British political turmoil in focus


October 21, 2022 02:11 AM ET


By: AnalysisWatch


The GBP/USD pair extended its losses from the previous day on the disappointment of UK retail sales figures in the first London trading session on Friday. As a result, the currency pair hits another intraday low around 1.1180 and falls below the critical support of 1.1200.


UK retail sales fell by 6.9%, compared to the expected-5.0% and the previously downwardly revised-5.6%. Monthly data also missed its target at-1.4% vs. 0.5% expected and 1.7% previous.


In contrast to the crucial UK gross domestic product (GDP) component, hopes that the next UK leader will be more solid and able to pull the country back from the brink of recession seem to limit the immediate downward trend of the cable pair. In addition, years of high U.S. Treasury yields and aggressive Federal Reserve bets are weighing on cable amid political uncertainty until the next head of government is found.


Earlier in the day, UK GfK consumer confidence improved to -47 in September from the previous month's record low of -49, which was the lowest reading ever.


Nonetheless, 10-year U.S. Treasury bond yields had risen to a 14-year high the previous day and stood at 4.22% at press time. Two-year U.S. Treasury bond yields also rose to their highest level since 2007 before settling at 4.62%. Of note, Wall Street closed in the red after an initial positive performance, while S&P 500 futures extended the previous day's losses, falling 0.50%.


It should be noted that on the previous day, the positive US data combined with the hawkish comments of the Federal Reserve pushed up yields and exerted downward pressure on GBP/USD prices. In addition, the resignation of British Prime Minister Lizz Truss made her the longest-serving head of government in the country and pleased the sellers of the pair on Thursday.

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