- UK sales rose 0.3% in September.
- Retail sales in the US jumped 0.4% in September.
- Traders are closely following the upcoming US presidential election.
GBP/USD price analysis points to a change in sentiment as the pound recovers after a better-than-expected retail sales report. At the same time, the dollar remained steady after retail sales data beat estimates in the previous session.
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Sterling recovered from recent lows after data showed UK sales rose 0.3% in September. Meanwhile, economists had expected a 0.3% drop in sales. A strong economy is easing pressure on the Bank of England to reduce borrowing costs. Nevertheless, market participants still expect rate cuts in November and December.
Meanwhile, the pair fell in the previous session after the US released another upbeat economic report. Retail sales jumped 0.4% in September, beating forecasts for a 0.3% rise. At the same time, core sales rose 0.5%, above forecasts of 0.1%.
The US economy has shown resilience despite high interest rates. Accordingly, Fed policymakers have become more cautious in their remarks. At the same time, markets have begun to price in the likelihood of a Fed pause at the November meeting.
Elsewhere, traders are keeping a close eye on the upcoming US presidential election. The dollar has recently risen due to increased bets on a Trump victory. Such an outcome would likely mean tariff increases and other changes that would lead to inflation. Higher inflation would trigger the Fed’s current easing cycle and likely lead to a pause.
GBP/USD key events today
Traders will continue to digest a robust UK retail sales report as there are no events scheduled for today.
GBP/USD technical price analysis: The rebound stops at a solid resistance zone
From the technical side, GBP/USD price is on the verge of breaking above the 30-SMA resistance. The pair recovered after forming a bullish candlestick pattern at the recent low. This price action was a sign that the bullish momentum was building. Furthermore, it came after a bullish divergence of the RSI, which showed weaker bearish momentum.
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However, the bulls now face a strong barrier consisting of the 30-SMA and the 1.3051 resistance level. Meanwhile, the RSI has broken above 50 and is trading in bullish territory. A break above the resistance zone would allow GBP/USD to revisit resistance at 1.3201. Otherwise, the downtrend will reach 1.2950.
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