GBPUSD Fundamental Analysis – 22-July-2024

The GBP/USD has shown a strong rebound, holding above $1.289 immediate resistance after reaching a one-year high of over $1.3. This resurgence comes as the US dollar weakens following President Joe Biden’s unexpected decision to withdraw from the 2024 election.

UK Retail Sales Slump Signals Rate Cut

Recent economic data from the UK has painted a complex picture. Retail sales fell by 1.2% in June, a sharper decline than the anticipated 0.4%. This drop raises the possibility of an interest rate cut by the Bank of England in August.

The contraction in retail sales comes on the heels of slower wage growth and inflation hitting the Bank of England’s 2% target, suggesting a cooling economy.

GBPUSD Fundamental Analysis – 22-July-2024

Investors are now closely monitoring upcoming economic indicators. The July purchasing Managers’ Indexes (PMIs) are expected to show accelerated growth in both the manufacturing and services sectors.

Additionally, the Confederation of British Industry (CBI) factory orders gauge is projected to reach a one-year high, indicating stronger manufacturing activity.

Across the Atlantic, the focus is on the US Federal Reserve. There is increasing anticipation that the Fed will cut interest rates in September, which could further weaken the dollar—recent economic uncertainties and shifts in the political landscape fuel this expectation.

Final Word

In summary, political events and economic data influence the British pound’s recent performance and the dollar’s decline. Investors should watch upcoming UK PMI and CBI data for more precise insights into market trends while also considering potential Federal Reserve actions in the US. These factors collectively guide the market, shaping currency values and investor strategies in the coming months.

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