GBP/USD: Cable Falls to Multi-Decade Lows as Downbeat UK Data Add to Negative Outlook


Sterling fell further on Friday and broke below the 1.14 mark against the dollar, trading at the lowest levels since 1985 during the European session.

In addition to continued pressure from a strong dollar on expectations of another massive Fed rate hike, the pound was driven lower on Friday by much weaker than expected UK retail sales, which fell 1.6% in August after a 0.4% rise in July and also much below predicted. 0.7% falls.

The August drop is the biggest since December 2021 and adds to warnings that the economy is slipping into recession as consumer spending comes under more pressure from the rising cost of living.

A breach of the very important 1.14 zone (declining post-Brexit vote in 2016 and pandemic in 2020) would risk a stronger boost and reveal psychological support from 1.10.

Bearish daily and weekly studies support the action, with a further negative signal seen on the formation of a bearish engulfing pattern on a weekly chart, although an oversold condition warns that bears may calm down before a resumption.

All eyes are on two key events next week, policy meetings of the US Federal Reserve and the Bank of England.

The Fed is widely expected to deliver another 75 basis points, but with a significant percentage of those betting on a massive 1% hike, while the BoE is likely to go for another 50 basis points.

Res: 1.1405; 1.1450; 1.1480; 1.1521.
Sup: 1.1350; 1.1300; 1.1227; 1.1200.




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