The Pound Sterling (GBP) has surrendered some gains as the United States Retail Sales turned out significantly upbeat than expectations. The US Census Bureau has reported that consumer spending grew strongly by 0.6% against expectations of 0.4% and the former reading of 0.3%. Retail Sales excluding automobiles rose by 0.4% against expectations and the prior reading of 0.2%. Earlier, gains in the Cable were boosted by the release of the surprisingly stubborn United Kingdom consumer price inflation data for December. The GBP/USD pair recovered losses as hopes of an early rate cut by the Bank of England (BoE) have waned amid higher price pressures. The Consumer Price Index (CPI) came in higher than expected amid a significant rise in Oil prices and slightly higher service inflation. Still-high inflation in the UK means that BoE policymakers have more room to maintain interest rates at the current 5.25% for a longer period. BoE policymakers have been warning that it is too early to discuss interest rate cuts as price pressures are far above the required rate of 2%.
Meanwhile, a sharp recovery in the Pound Sterling could stall as the market mood is quite cautious. Market sentiment has turned downbeat as investors are uncertain about when the Federal Reserve (Fed) will start the rate-cut campaign. Pound Sterling delivers a swift recovery after discovering strong buying interest near the round-level support of 1.2600. The GBP/USD pair has rebounded after testing the 50-day Exponential Moving Average (EMA), which trades around 1.2600. The near-term demand for the Cable will improve if it stabilizes above the 20-day EMA, which oscillates around 1.2690. The GBP/USD pair manages to hold an auction above the 50% Fibonacci retracement at 1.2590 (of the move from July 13’s high at 1.3142 to October 4’s low at 1.2037). The 14-period Relative Strength Index (RSI) oscillates in the 40-60 range, which indicates a listless performance.
