forex.pm forex forum binary options trade - Forex - GBP/USD dips, US retail sales next
  • Welcome to forex.pm forex forum binary options trade. Please login or sign up.
 

GBP/USD dips, US retail sales next

Started by PocketOption, Oct 19, 2022, 01:05 pm

Previous topic - Next topic

0 Members and 1 Guest are viewing this topic.

PocketOption

GBP/USD dips, US retail sales next

FacebookTwitterEmail

GBP/USD has reversed directions today and is in negative territory. In the European session, GBP/USD is trading at 1.1274, down 0.34%.


Pound jumps on tax cut U-turn


The pound continues to show strong volatility and jumped 2% on Thursday. The sharp swings over the past few weeks were triggered by Chancellor Kwarteng’s mini-budget in late September. Normally tame affairs, the mini-budget contained sweeping tax cuts to stimulate economic growth. Perhaps a solid idea in normal times, but with soaring inflation, high interest rates and the spectre of a recession, the markets absolutely savaged the plan. Even the IMF gave the plan a thumbs-down. The pound plunged to a 37-year low after the tax cuts were announced, and the Bank of England had to intervene due to a near-crash in the UK bond market. The new Truss government has had to make a humiliating about-face, and reports on Thursday that the government would abolish the planned tax cuts sent the pound sharply higher.


The BoE was forced to step in with an emergency gilt-buying program, which is expected to end today. There is some concern that the bond market could show further volatility, in which case the BoE will have to again intervene. The government’s clumsy attempt to slash taxes could cost Prime Minister Truss and Chancellor Kwarteng their jobs, and the political uncertainty and instability surrounding the new Truss government will only add to the pound’s problems.


The US wraps up the week with the September retail sales report. This will be a report card on how consumer spending is holding up, given red-hot inflation and high interest rates. Headline retail sales is expected to nudge lower to 0.2% MoM (0.3% prior), while core retail sales is projected to come in at -0.1% (-0.3% prior).


.


GBP/USD Technical



  • GBP/USD faces resistance at 1.1373 and 1.1455

  • There is support at 1.1214 and 1.1085



Source: GBP/USD dips, US retail sales next