- GBP/USD failed to capitalize on the previous session’s goodish positive move.
- No-deal Brexit fears, stronger USD prompted some fresh selling on Friday.
- Mixed US retail sales did little to dent the bullish sentiment around the USD.
The GBP/USD pair held on to its weaker tone and dropped to fresh session lows, around the key 1.30 psychological mark in reaction to the latest US macro data.
As investors looked past the latest UK political developments, the pair failed to capitalize on the previous session’s strong intraday positive move of around 125 pips and started retreating from a resistance marked by 50-day SMA.
GBP/USD weighed down by a combination of factors
It is worth recalling that the pair on Thursday attracted some aggressive dip-buying after the UK government confirmed that Rishi Sunak, the current chief secretary to the Treasury, has been appointed as the new Chancellor of the Exchequer.
Expectations that Sunak would be more likely to unveil a big-spending boost in next month’s Budget prompted investors to scale back their bets for an eventual interest rate cut by the Bank of England, which provided a strong boost to the sterling.
However, concerns that Britain might crash out of the European Union at the end of the transition period held investors from placing any fresh bullish bets. This coupled with the prevailing bullish sentiment surrounding the US dollar prompted some fresh selling.
The USD remained well supported by mostly in line US retail sales figures for January, which came bang in line with expectations and recorded a modest growth of 0.3%. Meanwhile, sales excluding automobiles (core retail sales) are matched expectations and rose 0.3%.
The readings were strong enough to largely offset a disappointment from the closely watched Retail Sales Control Group and did little to prompt any meaningful USD selling. Friday’s US economic docket also features the release of the Michigan Consumer Sentiment Index.