GBPUSD declines by 0.33% as mixed US economic data stirs market anticipation

GBPUSD Analysis

Performance after Tuesday
Period	Pct	Chg	Momentum
Tuesday	-0.33%	-43.7 Pips
Week to-date	0.18%	24.3 Pips
September	-0.03%	-4 Pips

Upcoming key events (London Time)

Wed 07:00 AM GBP Consumer Prices Index (CPI) (1-mth)
Wed 07:00 AM GBP Consumer Prices Index (CPI) (12-mth)
Wed 07:00 PM USD Fed Interest Rate Decision (Federal Funds Rate)
Wed 07:00 PM USD Interest Rate Projections
Thu 12:00 PM GBP Bank of England Interest Rate Decision (Bank Rate)

What happened lately

In the United States, industrial production saw a significant increase in August, rising to 0.8% from a negative -0.6% in July, according to the latest economic data. This rebound indicates a recovery in the manufacturing and utilities sectors. However, retail trade metrics tell a different story. Retail Trade Control Group fell to 0.3% from a revised 0.4% in July, as reported by the Census Bureau. Additionally, retail trade excluding automobiles decreased markedly to 0.1% in August from 0.4% in July. These retail figures suggest consumer spending may be weakening, raising concerns about economic robustness.

The upcoming events include significant data releases from both the UK and the US, which could impact the forex market, particularly GBPUSD. The UK will release its Consumer Prices Index (CPI) data for both the month and the year early Wednesday morning, which will heavily influence the Bank of England’s monetary policy. Later on Wednesday, the US Federal Reserve will announce its Interest Rate Decision and projections, which could further influence market expectations and the USD. The Bank of England’s own Interest Rate Decision is also scheduled for Thursday afternoon, which will further provide insights into the UK’s economic strategy under the current inflationary pressures.

Given this mixed data from the US, the GBPUSD dropped by 0.33% to 1.31623 on Tuesday. Weak retail figures might not be enough to sustain such a decline, especially if the Federal Reserve decides to maintain its current interest rate, potentially weakening the USD. Conversely, if the Bank of England continues to tighten its monetary policy against an elevated CPI, it could strengthen the GBP, pushing GBPUSD higher. Investors should monitor these events closely, as the upcoming central bank meetings will likely set the tone for the currency pair’s near-term trajectory.

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What can we expect from GBPUSD today?

GBPUSD on Tuesday dropped -0.33% to 1.31623. Price is above 9-Day EMA while Stochastic is rising.

Updated daily direction for GBPUSD looks bearish as the pair posted lower in Tuesday trading session.

Looking ahead for the day, immediate support level is at S1 1.31288 with break below could see further selling pressure towards S2 at 1.30952. To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 1.32295 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 1.31456 would indicate selling pressure.

For the week to-date, take note that GBPUSD is mixed as compared to the prior week.

Key levels to watch out:

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