Daily Analysis GBPUSD - 24 July 2023

On Friday, the UK's Office for National Statistics (ONS) released its report indicating that the country's monthly Retail Sales data increased by 0.7% in June, compared to a mere 0.1% rise in May, which exceeded the expected 0.2% growth. However, the annual Retail Sales data contracted by 1.0%, although it was better than the anticipated -1.5% and the previous -2.1%.

Additionally, the monthly headline Consumer Price Index (CPI) showed a 0.1% expansion, falling short of the consensus forecast of 0.4% and lower than the 0.9% figure from the previous period.

As of August 3, investors held divergent views on the Bank of England's (BoE) future interest rate policy. While some market participants expected BoE Governor Andrew Bailey to implement a 50-basis point (bps) interest rate hike, a group of investors leaned towards a more conservative 25-bps rate hike due to the softer inflation data.

In the US, the labor market exhibited resilience as unemployment claims data showed lower-than-anticipated levels recently. Consequently, the market is now pricing in almost a 100% probability of a 25-bp rate hike during the upcoming FED meeting, which would mark the last hike in this tightening cycle.

The GBP/USD found support at the 1.2850 level. A first rejection of this level has occurred, and a breakout may lead the price toward the next target of 1.2750.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
1.3310	1.3200	1.3000	1.2850	1.2750	1.2650