The British Pound Sterling advanced by approximately 0.40% on Friday, buoyed by a series of weak US economic data that reinforced expectations for a dovish stance from the Federal Reserve. GBP/USD traded at 1.3545 after rebounding from daily lows of 1.3482, marking a positive week for the currency pair [1]. The US Dollar Index (DXY) fell 0.40% to 99.54, nearing weekly lows as traders reduced bets on further Fed rate hikes [1].
US July Retail Sales ended a nine-month streak of gains, declining by 0.6%, which was below the forecasted 0.1% increase. The sales control group, a key component for GDP calculations, also dropped by -0.4% after a 0.4% rise in June, according to the US Commerce Department [1]. Consumer sentiment, as measured by the University of Michigan's preliminary August reading, deteriorated from 55.2 in July to 51.0, breaking two months of improvement. Inflation expectations for the next 12 months edged up from 4.2% to 4.3%, while five-year expectations remained steady at 3.3% [1].
Following these data releases, money markets now expect the Fed to hold rates unchanged, with a 70% probability, while the chance of a rate hike stands at 30%, as indicated by Prime Terminal [1]. In the UK, the economic calendar was relatively quiet except for the release of GDP figures, which showed the economy expanded by 0.3% in June, the strongest growth among G7 countries [1].
Looking ahead, the UK will release inflation, employment, and retail sales data next week, while the US will publish housing data, ADP Employment Change 4-week average, jobless claims, and Flash PMIs [1]. Technical analysis suggests GBP/USD is trading above key support levels, with upward momentum remaining constructive but increasingly stretched. Immediate resistance is at 1.3590, and a sustained move above this level could lead to further gains, while failure to clear it may result in a corrective pullback toward 1.3508 [1].
CONCLUSION
Weak US retail sales and deteriorating consumer sentiment have pressured the US Dollar, supporting a rise in the British Pound and reinforcing expectations for the Fed to hold rates steady. The GBP/USD pair remains technically bullish, with upcoming UK and US economic data likely to influence future market direction.