A softer-than-expected inflation report dragged GBP lower earlier today.
Will the pound regain pips against the dollar when Uncle Sam prints its retail sales data?
Before moving on, ICYMI, yesterday’s watchlist checked out GBP/JPY’s ascending triangle pattern after the U.K. printed upbeat labor market figures. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
FOMC’s Logan: Fed must be prepared to “continue rate increases for a longer period than previously anticipated”
FOMC’s Harker: Fed “likely close” to reaching rates high enough for pausing
FOMC’s Williams: “there are risks that inflation stays higher for longer than expected, or that we might need to raise rates higher” than current forecasts
EIA: U.S. shale oil and natgas output set to rise to record highs in March
ECB member Gabriel Makhlouf sees interest rates being “higher than 3.5%”
API: U.S. crude stockpiles up by 10.507M barrels in the week ended Feb 10 vs. 2.184M barrel draw in the previous week
Oil prices drop as U.S. inventories jump fuels demand worries
RBA Gov. Lowe: “I don’t think we’re at the peak yet but how far we have to go up I don’t know”
UK inflation rate falls more than expected, down from 10.5% to 10.1% y/y in January
Asia stocks fall, dollar stands firm after sticky U.S. CPI
UK manufacturers’ factory gate prices up by 13.5% y/y in January – the lowest since February 2022 – after 14.6% uptick in December
Upcoming Potential Catalysts on the Forex Economic Calendar:
Eurozone’s industrial production and trade balance at 10:00 am GMT
Canada’s housing starts at 1:15 pm GMT
US retail sales at 1:30 pm GMT
US NY manufacturing index at 1:30 pm GMT
ECB President Lagarde to give a speech at 2:00 pm GMT
US industrial production at 2:15 pm GMT
US NAHB housing market index at 3:00 pm GMT
US crude oil inventories at 3:30 pm GMT
Japan’s core machinery orders at 11:50 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
What to Watch: GBP/USD
A report printed earlier today showed U.K.’s consumer prices rising by “only” 10.1% from a year ago in January. The increase didn’t only mark the third consecutive monthly deceleration for CPI, it’s also the lowest increase since September 2022.
A softer-than-expected inflation means the Bank of England (BOE) won’t have to work harder to combat high consumer prices.
The prospect of fewer interest rate increases has dragged GBP lower across the board. GBP/USD, which spiked to 1.2270 yesterday, dropped from its intraday consolidation at 1.2150 to trade at the 1.2100 zone.
Can GBP recover from its intraday losses?
Technical indicators are favoring some buying as price hangs around the 1-hour chart’s ascending channel and 200 SMA support.
Even Stochastic is turning higher after dropping to “oversold” levels.
Today’s U.S. retail sales release could make or break GBP/USD’s short-term uptrend.
Healthy consumer spending would support a stickier high inflation in the U.S. and convince Fed members that they have room for further rate hikes.
USD demand could heat up and drag GBP/USD to its February lows.
But if today’s reports lead to risk-taking in the markets, then GBP/USD would bounce from its channel and SMA support. The pair could retest its 1.2150 inflection point if not return to its 1.2250 February highs.
