GBP/USD falls for four straight days as focus shifts to the BOE decision
- The GBP/USD pair has declined for four straight days.
- On Friday, the pair reacted to the relatively weak UK retail sales data.
- The pair is also falling because of the Fed’s hawkish decision.
The GBP/USD is falling for the fourth straight day as traders react to the recent hawkish Fed decision and the relatively weak UK retail sales. The pair declined to 1.3853, which was more than 2.7% below the highest level in May.
UK retail sales decline
The UK retail sector experienced some weakness in May after bouncing back in the previous months. According to the Office of National Statistics (ONS), sales declined by 1.4% in May after rising by 9.2% in the previous month. This decline was worse than the median estimate of a 1.6% increase. The sales rose by 24.6% on a year-on-year basis from a low base in 2020.
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Core retail sales, which excludes food and energy, declined by 2.1% in May after rising by 9.1% in the previous month. This decline was worse than the median estimate of a 1.5% increase. According to the ONS, automotive fuel grew by 6.2% in May as people started to travel more. Sales of clothing also declined by 2.5% after surging in April. Department store sales also declined substantially.
Still, analysts at ING believe that retail sales in the country remained solid despite the sharp decline. The said:
“May’s decline in UK retail sales marks only a modest correction after a surge in April when shops reopened their doors. Retailers will be helped over the next few months by rising confidence and pent-up savings.”
The weak UK retail sales numbers came a few days after the ONS published strong consumer inflation data. The numbers revealed that the overall consumer price index (CPI) rose by 2% in May, in line with the BOE target. A day before, numbers showed that the UK unemployment rate declined to 4.8%. Most importantly, the data came two days after the relatively hawkish Fed decision.
GBP/USD technical analysis
The four-hour chart shows that the GBP/USD pair formed a double-top pattern at 1.4245 recently. Since then, the pair has fallen by more than 2%. The pair has also dropped below the 50-day and 25-day exponential moving averages (EMA) while the histogram and two lines of the MACD indicator have also declined below the neutral line. It has also crossed the Ichimoku cloud. The pair will likely keep dropping as investors target the next target of 1.3500 ahead of next week’s BOE decision.