- US retail sales data on Tuesday revealed a smaller-than-expected increase.
- The Fed has projected only one cut this year.
- The pound fell ahead of the Bank of England policy meeting.
The GBP/USD price analysis pointed south despite a decline in the dollar after retail sales missed forecasts. The pound remained weak as investors prepared for the Bank of England policy meeting later in the week.
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US retail sales data on Tuesday revealed a smaller-than-expected increase, showing consumer spending was not as great as expected in May. Moreover, figures for April were revised lower, indicating a slowdown in the economy. Retail sales increased by 0.1% in May after falling 0.2% in the previous month. This was in line with recent US data that has revealed weaker demand in the economy and cooler inflation. All this indicates a higher likelihood of the Fed implementing two rate cuts this year.
However, the Fed has projected only one cut this year, which has led to some confusion in the markets. If data continues showing weak economic activity, the Fed might be forced to cut rates earlier than December.
Meanwhile, the pound fell ahead of the Bank of England policy meeting, where the central bank will likely keep rates unchanged. At the same time, policymakers might hint at the possible timing of the first rate cut.
Investors are also gearing up for the UK CPI report coming on Wednesday, which will likely guide markets on the outlook for cuts in the UK. Economists believe inflation rose by 2.0% in May after a 2.3% increase in April.
GBP/USD key events today
Investors will keep digesting the US retail sales report as there are no more key events for the day.
On the technical side, the GBP/USD price has broken below the 1.2700 support, retested it, and is now moving lower. This is a big step for bears because the price has tried and failed to break below this support level for a long time. This break allows the price to trend lower and target the 1.2600 support level.
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The price trades well below the 30-SMA, and the RSI is below 50 in bearish territory, supporting the bearish bias. This bias will continue if the price trades below the 30-SMA, and the price might continue below the 1.2600 support.
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- Source: https://www.forexcrunch.com/blog/2024/06/18/gbp-usd-price-analysis-downbeat-us-retail-sales-boosts-pound/
