GBP/USD flits with session lows, around mid-1.3700s post-UK Retail Sales
- GBP/USD stalled this week’s goodish rebound from the lowest level since February.
- Brexit, COVID-19 jitters, mixed UK Retail Sales acted as a headwind for the sterling.
- A modest USD strength contributed to the selling bias ahead of the flash UK/US PMIs.
The GBP/USD pair remained on the defensive following the release of mixed UK Retail Sales figures and was last seen hovering near daily lows, around mid-1.3700s.
The pair struggled to capitalize on this week's strong recovery move from sub-1.3600 levels, or the lowest level since early February and edged lower during the Asian session on Thursday. The GBP/USD pair had a rather muted reaction to the UK macro data, which showed that headline Retail Sales grew 0.5% in June as compared to 0.4% expected and -1.3% previous. On an annualized basis, the UK retail sales rose by 9.7% in June versus 9.6% expected.
This, however, was offset by a slight disappointment from sales tripping the auto motor fuel, which recorded a modest growth of 0.3% during the reported month as against 0.6% expected. Adding to this, the yearly rate also fell short of expectations and increased by 7.4%. This comes on the back of rising COVID-19 infections in the UK, which along with the impasse over the Northern Ireland Protocol of the Brexit deal acted as a headwind for the British pound.
On the other hand, worries that the spread of the highly contagious Delta variant of the coronavirus could derail the global economic recovery extended some support to the safe-haven US dollar. Apart from this, a goodish pickup in the US Treasury bond yields further underpinned the greenback, which, in turn, exerted some pressure on the GBP/USD pair. Investors now look forward to the release of flash PMI prints from the UK and the US for some meaningful impetus.
Technical levels to watch