Pound Sterling Struggles Following Upbeat U.S Data

Fundamental Analysis

* Weak Pound: The pound remains weak as the U.S. dollar strengthens, bolstered by stronger-than-expected U.S. economic data. U.S. Retail Sales rose by 0.4%, exceeding the 0.3% forecast and surpassing August’s 0.1% increase, with robust demand at retail and food stores and for clothing. Additionally, jobless claims dropped to 241K, below the expected 260K, signaling resilience in the labor market. As a result, market participants are not anticipating significant Federal Reserve rate cuts, with expectations of 25-basis-point reductions in November and December. Rising expectations of Donald Trump winning the 2024 presidential election are further supporting the dollar, as investors foresee looser financial policies, higher tariffs, and tax cuts under a potential Trump administration.

Technical Analysis

* Technical Breakout: Recent bearish market structure breakout and MACD which signal diminishing bullish momentum signal suggest the pair to likely extend its bearish trend.

*Resistance and Support: If the bearish momentum persists, there’s a strong likelihood that the price will potentially head towards the level 1.29400. Conversely, a potential reversal is also to be expected and the price could head back towards 1.30900.

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Potential Risks

Looking ahead, investors will turn their attention to the upcoming UK Retail Sales figures, set to be released later today. Expectations are modest, with the median forecast predicting a -0.3% decline for September, following August’s relatively strong growth of 1.0%. Markets are not anticipating any significant surprises.

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Monitoring

Stay updated on US and UK data, central bank updates and any shifts in the US Dollar’s strength by following PU Prime’s market insights and daily financial news.

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Disclaimer: Trading derivatives involves high risks, and market conditions can change rapidly. The content is for informational purposes only and should not be considered as financial advice. Traders should conduct their own research and consider risk management strategies.