GBP/USD, Pound Sterling Weekly Fundamental Forecast: Bearish

  • Sterling unphased by UK inflation and retail knowledge – dangerous information already priced in
  • US PCE inflation knowledge is due and each UK and US remaining GDP figures to have restricted impact available on the market, barring any drastic surprises

GBP/USD Daily Chart

Source: TradingView, ready by Richard Snow

The pound had some slightly difficult knowledge prints to navigate this final week with UK inflation and retail knowledge alongside Jerome Powell’s two-day testimony. Inflation wants no introduction as it’s surging in main economies and printed in step with expectations at 9.1%, up 0.1% from the April print. Higher than anticipated inflation prints, at a time when members of the Bank of England (BoE) have appeared hesitant to hike on the identical tempo because the Fed, can have a unfavourable impact on the pound because it worsens the ‘cost of living squeeze’.

On Friday, we noticed disappointing UK retail gross sales knowledge (-4.7%) although expectations of a 4.5% contraction had been already anticipated. Price motion was slightly unphased because the cost-of-living squeeze is priced in and such knowledge prints line up with present GBP sentiment. Jerome Powell then spoke about financial coverage developments at size, including that the tender touchdown that was initially hoped for will show to be difficult.

Major Risk Events Next Week

Despite the variety of excessive significance occasions on the calendar, some knowledge prints aren’t anticipated to have a big impact on GBP/USD like the ultimate Q1 GDP offered the print is inline or close to sufficient to the prior readings. Jerome Powell is due to communicate as soon as extra on Wednesday.

Thursday sees the ultimate GDP print for the UK the place the identical logic applies and we then we see PCE inflation knowledge. Core PCE has really eased in prior prints, one thing Powell doesn’t see as a convincing indication that inflation is subsiding and has known as for extra conclusive knowledge earlier than the Fed can think about altering their present aggressive strategy. Then on Friday we now have US ISM manufacturing PMI knowledge which is anticipated to print at 55 (indicative of an expansionary manufacturing sector however nearing that fifty mark).

Pound Weekly Fundamental Forecast: Unflattering GBP Set to Continue

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In the absence of constructive GBP catalysts within the week forward, there shall be little to spur GBP/USD greater, other than a weaker greenback. Therefore, the outlook for the pound leans extra in direction of the bearish aspect.

— Written by Richard Snow for

Contact and comply with Richard on Twitter: @RichardSnowFX

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