- Great Britain released data showing that sales fell by 1.2%.
- Markets have discounted the chances of a BoE cut in August due to still high services inflation.
- Joe Biden announced on Sunday that he is no longer campaigning for the November election.
The GBP/USD forecast is leaning bearish, with the pound hovering near Friday’s lows due to a disappointing UK retail sales report. Meanwhile, the dollar eased after US President Joe Biden announced on Sunday that he was dropping his bid for re-election.
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The pound fell on Friday after the UK released data showing sales fell 1.2%, well above expectations for a 0.4% drop. This was a significant drop from May, when sales rose by 2.9%. Experts believe this drop was due to the colder weather during the month, which discouraged shoppers from buying.
However, the outlook for a Bank of England rate cut remained largely unchanged. Markets have discounted the chances of a cut in August due to still high services inflation. Consequently, the BoE could still be among the last major central banks to cut rates.
Meanwhile, the dollar fell slightly as markets absorbed the latest developments in the US presidential race. Joe Biden announced on Sunday that he is no longer running for the seat.
At the same time, investors focused on the prospect of a Fed rate cut after fully pricing in a rate cut in September. There is a small chance that the Fed will cut in July. The next big report is the core PCE price index, due on Friday. This will give additional insight into the state of inflation.
GBP/USD key events today
The pair will start the week slowly, as there will be no key reports on Monday or Tuesday.
GBP/USD Technical Forecast: Bears stall at 1.2900 support
On the technical side, the GBP/USD price paused near the key support level of 1.2900 after breaking below the 30-SMA. With the price now below the SMA, the bias is bearish. Furthermore, the RSI is trading below 50 in bearish territory.
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The reversal came after bullish momentum faded near the 1.3050 resistance level. The bears then took control pushing the price below the SMA. However, GBP/USD must start making lower highs and lows to confirm the downtrend. The next move could be resistance from the 30-SMA. If it remains firm, the price could break below 1.2900 to retest support at 1.2800.
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