GBP/USD: Bears take a breather ahead of UK retail sales, BOE

Latest Trump headlines took its toll on the US dollar across the board, offering the much-needed respite to the GBP bulls, as attention now turns towards the UK docket, with the retail sales and BOE policy decision on tap.

GBP/USD eyes a break of post-FOMC lows near 1.2730?

The USD bulls face exhaustion after the hawkish Fed hike induced solid rebound, resulting in a phase of bearish consolidation seen in GBP/USD, as the spot finds buyers near 1.2730 region so far this session.

The latest leg down seen in the greenback against its main competitors, is mainly driven by renewed US political jitters, after the Washington Post (WaPo) reported unnamed officials saying that a Special counsel is investigating Trump for possible obstruction of justice.

Moreover, the stalled selling in the spot can be also attributed to renewed weakness seen in treasury yields, as dust settles over the FOMC aftermath. However, cable looks vulnerable below a break of key support located near 1.2730/20 region, which may materialize on the release of the UK retail sales data. The UK retail sales are expected to drop sharply to -0.9% in May versus 2.3% seen last.

 Also, risks remains to the downside ahead of the BOE interest rate decision and minutes release, which may indicate rate-hike off the table for now, in the wake of inflation overshooting BOE’s target. Also, a dovish bias in the BOE’s statement cannot be ruled out, given the ongoing political uncertainty in the UK and ahead of Brexit deal.

GBP/USD Levels to consider            

Valeria Bednarik, Chief Analyst at FXStreet noted: “The pair retreated with the Fed's hawkish stance, but the 4 hours chart shows that it held a few pips above its 20 SMA, whilst technical indicators lost upward strength, with the Momentum holding flat around its 100 level and the RSI gaining downward strength within neutral territory. Given political uncertainty and the upcoming Brexit talks, the risk remains towards the downside, particularly on a break below 1.2705, the immediate support. Support levels: 1.2705 1.2660 1.2635 Resistance levels: 1.2780 1.2830 1.2870.”