Pound Sterling Weakens After Positive U.S. Data Release

Fundamental Analysis

* • Weak Pound: The pound remains weak as the U.S. dollar gains strength, driven by better-than-expected U.S. economic data. U.S. Retail Sales increased by 0.4%, outpacing the forecast of 0.3% and surpassing August’s 0.1% rise, with strong demand in retail, food stores, and clothing. Additionally, jobless claims fell to 241K, lower than the anticipated 260K, indicating labor market strength. Consequently, market participants do not expect major Federal Reserve rate cuts, with predictions of 25-basis-point reductions in November and December. Growing expectations of Donald Trump winning the 2024 presidential election are also bolstering the dollar, as investors anticipate looser financial policies, higher tariffs, and tax cuts under a potential Trump administration.

Technical Analysis

* Technical Breakout: : Recent bearish market structure breakout and MACD which signal diminishing bullish momentum signal suggest the pair to likely extend its bearish trend.

* Resistance and Support: If the bearish momentum persists, there’s a strong likelihood that the price will potentially head towards the level 1.29400. Conversely, a potential reversal is also to be expected and the price could head back towards 1.30900.

Potential Risks

Looking ahead, investors will turn their attention to the upcoming UK Retail Sales figures, set to be released later today. Expectations are modest, with the median forecast predicting a -0.3% decline for September, following August’s relatively strong growth of 1.0%. Markets are not anticipating any significant surprises.

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Monitoring

Stay updated on US and UK data, central bank updates and any shifts in the US Dollar’s strength by following PU Xtrader’s financial news page.

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