GBP/USD Outlook: Dollar Slips Further After US Retail Sales

• The GBP/USD outlook shows additional signs that the US economy is slowing down.

• US retail sales increased by 0.2%, missing forecasts of 0.6%. 

• Market participants expect the BoE to keep interest rates unchanged.

The GBP/USD outlook shows additional signs that the US economy is slowing down after retail sales came in below estimates. Meanwhile, market participants look forward to the FOMC and BoE policy meeting for more clues on future monetary policy moves. 

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Data on Monday revealed that US retail sales increased by 0.2%, missing forecasts of 0.6%. The poor figures indicated weak consumer spending, increasing Fed rate cut expectations. This was another report that raised fears of an economic slowdown. 

Recent US data has mostly come in below estimates. Employment missed forecasts in February, and inflation data last week was well below estimates. As a result, market participants are pricing slightly over two Fed rate cuts this year.

However, there is caution due to uncertainty regarding Trump’s tariffs. The subsequent trade wars might increase inflation, forcing the Fed to keep interest rates elevated. Moreover, inflation expectations have risen sharply since Trump took office. Traders expect the Fed to pause on Wednesday.

On the other hand, the pound was steady due to the weaker dollar. Moreover, market participants expect the Bank of England to keep interest rates unchanged this week.

GBP/USD key events today

Market participants do not expect any high-impact economic releases from the UK or the US. Therefore, the price might consolidate.

GBP/USD technical outlook: Bulls meet a solid hurdle at 1.3001

On the technical side, the GBP/USD price has paused its rally near the 1.3001 resistance level. However, the bullish bias remains intact since the price sits above the 30-SMA with the RSI above 50. However, price action has shown some weakness since bulls broke above the 1.2851 resistance level.

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The slope of the uptrend shallowed, and the price started trading near the 30-SMA. At the same time, the RSI made a bearish divergence, indicating weaker momentum. 

Bears will resurface at the 1.3001 resistance to push the price below the SMA if this divergence plays out. Such an outcome could mean a deep pullback or a reversal. Therefore, the price would likely retest the 1.2851 support. On the other hand, if bulls regain momentum, the price will break above the 1.3001 resistance to make a new high in the uptrend.

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