The week started well for the Britain Pound Sterling, but the currency does not appear to be holding its progress. Wednesday witnessed the GBP/USD pair falling back to 1.1500, fading its corrective bounce off the weekly low.
Most UK forex brokers believe the reason behind this dip to be the market’s growing uncertainty around the US data. At the same time, the pessimism surrounding the Brexit updates and British politics is also disheartening investors.
To top it all, Liz Truss, the UK Prime Minister, has failed to convince locals about the energy bills relief. These doubts have also shadowed the GBP/USD market prices as London fails to deliver a response to the EU.
With the deadline to activate Article 16 nearing, Brexit is also pressuring the market towards a dip. Traders witnessed the UK’s food price inflation continuing its surging pattern for the 13th month. The index accumulated a 1.5% jump, the biggest month-to-month hike since 1995.
On the other hand, the CPI (Consumer Price Index) fell to 9.9% versus the market forecast of 10.2%. The Retail Price Index hit 12.3%, falling short of the expected 12.4% YoY.
Regarding the US market, the PPI (Producer Price Index) fell to 8.7% from 9.8%. Data suggests that the index surrounding Food and Energy also hit 7.3%, falling from 7.6%. Even then, the FedWatch Tool favors the GBP/USD bears with a 75% chance of the Federal Reserve’s 75 basis points rate hike incoming.
Investors should note that China’s stimulus and Joe Biden’s rejection of market fears have also favored traders’ risk appetite. Nonetheless, the crisis among the Sino-American topped with Europe losing its energy source is challenging bears’ optimism.
The upcoming US Retail Sales figures for the previous month are also expected to stay at 0.0%. The index is crucial for the GBP/USD bears, especially with a lack of events and data from the UK.