On Friday, GBP/USD saw selling interest just over the 1.3300 level. Market participants were transfixed by the currency pair. The same GBP/USD movement is a reflection of the larger trends occurring in the market. It visually emphasizes the decades-long see-saw between the British pound and the US dollar.
The main catalyst behind the currency pair’s performance this week has been a burst of fresh buying pressure for the Greenback. From recent headlines, you’d think the US-China trade conflict is finally mellowing out.
Record-high demand for the dollar
As a direct result, demand for the US dollar has skyrocketed. As positive sentiment towards US-Sino relations spreads, investors seem to be rushing into the dollar, adding more downside pressure on GBP/USD.
As things stand, GBP/USD is defending the bottom of the multi-week range in the low-1.3300s. Traders are on the defensive. There’s no question they all out there extremely aware of the geopolitical conditions and how that affects the value of international currencies and reserves. Recent GBP/USD gyrations show how sensitive markets are to anything that threatens the UK’s economic standing. These developments have direct impact in shaping our trade and trade relations.
Against the backdrop of the woes impacting GBP/USD, the UK retail sales data published earlier this week shocked to the upside. The bright retail sales figures suggest that the consumer spending engine of the UK economy remains surprisingly buoyant. This resilience goes a long way in offsetting much of the pound’s increasing external pressure. Despite these positive overall economic indicators, GBP/USD has maintained a bearish trend.
Markets are eying again the growing dynamic between domestic economic fundamentals and the other shoe that is dropping—external pressures, notably in the form of trade negotiations. A melange of UK retail sales would be a risk to sterling shorts, as they would add confidence to the pound. The strong US dollar is a real killer.
Market observers note that the trajectory of GBP/USD will likely remain influenced by ongoing developments in US-China relations as well as other macroeconomic factors. Getting a greenback
Both currencies have their work cut out for them. Traders will likely be looking to jump on any changes in sentiment as the news develops.