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Market News As investors wait for UK Retail Sales and US PMI, GBP/USD confronts barriers around 1.2000

As investors wait for UK Retail Sales and US PMI, GBP/USD confronts barriers around 1.2000

As the DXY has fared better in morning trading, the GBP/USD has entered a correction phase. The DXY is being supported by anticipation of a Fed decision on interest rates. Despite intense pricing pressure, UK retail sales may decline.

Daniel Rogers
2022-07-22
468

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In the Asian session, the GBP/USD pair has been under selling pressure as it tries to overcome the psychological resistance of 1.2000. Prior to this, the cable showed a vertical upward movement following receptive purchasing from a low of 1.1890 on Thursday. Although the asset anticipates a corrective move, this does not call for a negative reversal.

 

As investors bet on the Federal Reserve (Fed) raising interest rates next week, the US dollar index (DXY) has seen some solid purchasing activity in its opening hour. The likelihood of a rate increase of 100 basis points (bps) has undoubtedly decreased after a decline in US long-term inflation forecasts. The current pricing pressures, nevertheless, must be addressed sooner since they continue to be disastrous. As a result, the Fed may decide to keep things as they are or announce a 75 basis point rate increase.

 

Investors' attention will be on the US S&P PMI data throughout the session today. The Global Composite data is now 51.7, down from 52.3 in the previous edition. The Manufacturing PMI may drop from the previous reading of 52.7 to 52. While the Services PMI is anticipated to show a little improvement to 52.6 from the previous reading of 52.7. The DXY will remain on the back foot as a result.

 

The Retail Sales report will continue to be the key concern on the pound front. According to an early assessment, the economy is -5.3 percent more susceptible than it was in the last report, which was -4.7 percent. It is important to note that rising energy prices are already driving up retail sales. The projection for retail sales should have increased due to runaway inflation. However, a lower consensus suggests that overall demand is so weak that not even pricing pressures can raise prices over their previous level.


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