GBP/USD Holds Steady Amidst US Market Turbulence and Positive UK Retail Data

During the US market session, the GBP/USD pair maintained a strong position, staying above the 1.2700 threshold. This recovery followed a surge in the European trading period, propelled by the UK’s unexpectedly robust Retail Sales figures for November.

In a surprising development, UK Retail Sales in November increased by 1.3% month-over-month, surpassing the anticipated 0.4% rise and marking a significant rebound from October’s stagnant performance. Year-over-year Retail Sales until November also outperformed expectations, registering a 0.1% increase compared to the projected -1.3%, a notable improvement from the prior -2.5% (which was slightly revised from -2.7%).

The encouraging Retail Sales data in the UK bolstered confidence in the Pound, despite a lower-than-expected reading in the UK Gross Domestic Product (GDP). The annualized quarterly GDP growth was a mere 0.3%, falling short of the 0.6% expectation, with a quarter-over-quarter decline of 0.1% against the anticipated flat performance.

In the US, key economic data regained focus on Friday, particularly with slowing inflation exerting downward pressure on the US Dollar in broader markets. The US Personal Consumption Expenditure (PCE) Price Index for November indicated a quicker-than-anticipated deceleration in inflation.

The annualized Core PCE inflation rate stood at 3.2%, below both the forecast of 3.3% and the previous period’s 3.4% figure (which was marginally adjusted from 3.5%). Adding another dimension, US Durable Goods Orders for November suggested a potentially more resilient US economy than some market participants expecting rate cuts might hope for.

The orders saw a robust increase of 5.4%, significantly surpassing the forecasted 2.2% and recovering from the previous -5.1% (revised from -5.4%).

GBP/USD Technical Outlook

The GBP/USD pair is currently testing the critical resistance at 1.2720, warranting a cautious approach in upcoming trades. For the bearish trend to remain viable, the price must stay below this level, a sentiment echoed by the currently negative stochastic indicators. It is important to note that the primary target is pegged at 1.2590.

Today’s trading range is expected to fluctuate between the support level of 1.2600 and the resistance level of 1.2740, with the trend anticipated to be bearish.

GBP/USD Live Chart