The GBP/USD currency pair saw its two-day upward trend come to a halt on Thursday, as demand for the British Pound fluctuated around the 1.2200 level. Recent economic data from the UK has fallen short of expectations, intensifying the focus on the upcoming retail sales figures scheduled for release.
Trading for the GBP/USD was largely uneventful, as it hovered near established levels after experiencing some intraday declines. The pair faced challenges in sustaining momentum above the 1.2200 threshold. In the UK, despite a reported rebound in Gross Domestic Product (GDP) growth for November, the figure of 0.1% growth month-on-month was below the 0.2% forecast. Though this represented a slight recovery from the previous month’s contraction of -0.1%, it still showcased ongoing economic struggles. Additionally, UK Industrial Production declined by 0.4% in November, again missing the expected increase of 0.1%, following a prior decrease of -0.6%.
Meanwhile, in the United States, December Retail Sales showed a moderation to a 0.4% month-on-month increase, which fell short of the anticipated 0.6% decline from a revised 0.8% in the previous month. However, Core Retail Sales, which exclude automotive purchases, aligned with forecasts, registering a growth of 0.4%. This combination of mixed results contributed to a stable outlook for the dollar among investors.
Looking ahead, the market expects a rebound in UK Retail Sales figures, projected to rise to 0.4% from the previous month’s 0.2%. On an annual basis, a significant increase to 4.2% from 0.5% is expected, emphasizing the challenges facing the UK economy in meeting market predictions.
The price trajectory of GBP/USD remains uncertain, particularly after reaching a new 15-month low recently. Although bids have rebounded from the 1.2100 level, the pair continues to struggle to break above 1.2200. If current trends persist, the pound could close out the month on a negative note for the fourth consecutive time, posing challenges for bullish sentiments. Technical indicators suggest a prevailing bearish momentum, while traders may be eyeing potential reversals as the market landscape evolves.
