The pound gave back much of its Wednesday advance against the dollar after firm US data revived the greenback and pushed GBP/USD down more than 0.48% to 1.3375. A separate rebound toward 1.3400 followed a mixed batch of US figures, leaving sterling capped below resistance.
Sterling slid on Thursday as solid US data revived demand for the dollar and dragged GBP/USD to 1.3375, down more than 0.48% from a session peak near 1.3545. The move trimmed much of the pound’s gains from Wednesday, when the pair had pushed higher.
Risk aversion lifts the dollar
The sell-off arrived alongside risk aversion, which added to the safe-haven appeal of the greenback, according to FXStreet. Sterling struggled to hold its recent advance as investors moved toward the dollar.
On the domestic side, the pound stayed almost muted after UK monthly GDP rose 0.1% in May, matching expectations, after the economy had contracted at a similar pace in April. The in-line print gave traders little reason to add to pound positions.
Mixed US data clouds the Fed path
The US picture was less clear-cut. Headline retail sales rose 0.2% in June, matching expectations, while the control group climbed a stronger-than-expected 0.5%. However, core retail sales excluding autos unexpectedly fell 0.2%, tempering enthusiasm for the dollar even as weekly jobless claims declined again.
That mix let GBP/USD rebound toward 1.3400, though the pair could not break key resistance. Markets remain divided over whether resilient consumer demand will keep the Federal Reserve on a hawkish path, particularly after softer inflation data earlier in the week.
Resistance caps the recovery
Scotiabank said the pound’s recovery from its June 24 low near 1.3150 appears to have stalled, with resistance above 1.3400 and a near-term range between 1.3350 and 1.3450. ING, meanwhile, holds a three-month GBP/USD target of 1.31 as the dollar makes headway.
The rate outlook stays the swing factor. Scotiabank said soft CPI data may curb the market’s enthusiasm for rate hikes, while ING said that CPI data had taken the sting out of the dollar’s upside, adding: “…it is probably too early to look for a much lower dollar just yet”.
Sources: FXStreet (snippet-based), Currency News UK
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