- UK wage growth data comes in below expectations, casting doubts on further BoE rate hikes.
- US Retail Sales for September surpass expectations, with August data revised upwards.
- Speculations rise on a potential Fed rate hike in December; CME FedWatch Tool indicates a 42.90% probability.
The Pound Sterling (GBP) remains on the defensive vs. the US Dollar (USD) after data from the United Kingdom showed wages are decelerating. That and a solid Retail Sales report in the United States (US) weighed on Sterling. Therefore, the GBP/USD dipped below 1.2200, a loss of 0.25%.
GBP/USD weighed by BoE’s expected rate hike pause, solid US economic data
In the European session, jobs data from the UK showed that wages came slightly below estimates, reinforcing market participants’ thesis that the Bank of England (BoE) is done raising rates. In the latest BoE meeting, the central bank decided to stay put in rates on a 5-4 vote split, even though inflation levels remain at three times the BoE’s target.
Before Wall Street opened, a tranche of US economic data showed that American consumers remain resilient, despite the 525 basis points of tightening by the Federal Reserve. US Retail Sales in September exceeded forecasts, though it trailed August’s upward-revised figures. That stirred speculations the Fed could hike rates at the December meeting, as shown by the CME FedWatch Tool with odds for a quarter of a percent hike at 42.90%.
Consequently, US Treasury bond yields skyrocketed, with the US 10-year benchmark note climbing twelve basis points at 4.83%. Still, the Greenback remained trading softer, as shown by the US Dollar Index (DXY), dropping 0.05%, at 106.15.
Meanwhile, Federal Reserve officials remained hawkish, as Richmond Fed President Thomas Barkin emphasized the US central bank’s restrictive policy while adding he’s uncertain where rates would be three weeks from now.
Ahead of the week, GBP/USD traders are eyeing inflation figures for September, to be revealed on Wednesday. Across the pond, US housing data and Fed speakers would provide a fresh catalyst to the major.
GBP/USD Price Analysis: Technical outlook
The daily chart portrays the GBP/USD as neutral to downward biased. The 50=day moving average (DMA) crossing below the 200-DMA, formed a death-cross a bearish sign, warranting further downside. The first support would be last week’s low of 1.2122 before diving towards 1.2100. A breach of the latter would expose the October 4 swing low of 1.2037.
