GBP/USD – Cable Slips Below 1.30 on Dovish BoE, Soft Retail Sales

The pound remains under pressure and has slipped over 2 percent this week. A warning from the BoE and a decline in retail sales on Thursday have contributed to cable’s slide.
Kenny Fisher
GBP/CAD Last Line of Defense for Bulls

GBP/USD has recorded small gains in Friday trade. Currently, the pair is trading at 1.3024, up 0.12% on the day. It has been a dreadful week for the pound, which has fallen 2.2 percent, one of its worst weeks this year. The week wraps up with British Final GDP, which is expected to rebound in Q3 with a gain of 0.3%. The economy contracted by 0.2% in the second quarter.

Retail Sales Slide as Consumers Fret

British consumers were in a sour mood in November, as retail sales fell 0.6 percent. This reading was much worse than expected, as the estimate stood at +0.3 percent. No less worrying, retail sales have failed to post gains since July. Will consumers’ moods improve, now that there is more political certainty and Brexit is set to become a reality? If not, we can expect the pound to head lower. Another indication of subdued consumer activity is low inflation, which has come in at just 1.5% in the past two months. This is well short of the BoE’s inflation target of 2 percent.

There were no surprises from the Bank of England on Thursday, which maintained interest rates at 0.75%, where they have been pegged since August 2018. In a repeat of the November meeting, two of the nine MPC members voted to immediately trim rates to 0.50%. The bank’s rate statement was dovish, and left no doubt about its concern over risks to the economy, stating: “If global growth fails to stabilize or Brexit uncertainties remain entrenched, monetary policy may need to reinforce the expected U.K. recovery.” This dovish stance has weighed on the British pound.


Technical Analysis

GBP/USD continues to lose ground this week and break below support levels. The pair is testing the 1.3000 level, which has psychological significance. Below, there is support at 1.2940, which has held firm since the first week of December. On the upside, we find resistance at 1.3050, followed by the round number of 1.3100.

GBP/USD 1-Day Chart


Pacific Currencies – Summary


USD/CNY plunged to a five-week low late last week, but has since clawed its way back to the symbolic 7.00 level. Currently, the pair is trading at 7.0097, unchanged on the day.


Aussie Gains on Strong Job Numbers

AUD/USD continues to show strong swings this week, as the pair tries to find its footing. Currently, the pair is trading at 0.6887, up 0.02% on the day. The Aussie posted considerable gains on Thursday, as employment change roared in November, with a sparkling gain of 39.9 thousand jobs in November, its highest reading in four months. As well, the unemployment rate ticked lower to 5.2%, down from 5.3 percent a month earlier.


After strong weekly gains for two successive weeks, NZD/USD has taken a pause. Currently, the pair is trading at 0.6592, down 0.12% on the day. In economic news, here was good news on the consumer front. Credit Card Spending posted a strong gain of 4.5%, up from 2.5% in the previous release.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.