August 19, 2022 18:20:00

The Sterling continues to trade lower against the greenback. A renewed buying pressure on the U.S dollar and the disappointing UK economic data weighed on the prospectus of the British Pound.

The retail sales volume gained 0.3% in July following a fall of 0.2% in June. Although the sales were down 3.4% on the yearly basis. The data indicates a difficult time for the economy.

Further, the GfK’s measure of UK consumer confidence dropped to an all-time low to -44 in August from -41 in July, below the market expectations of -42.

The Cable fell to $1.1800, its lowest level since March 2020. Investors remained concerned about the surging inflation that would mean higher interest rates and a dwindling British economy outlook. The U.K inflation hit up to a fresh 40-year high of 10.1% in July, raising bets of a 50bps rate hike in September.

The U.S dollar index jumped above 108 on Friday and is up by nearly 2% so far this week. The move was partially sponsored by hawkish remarks from Federal Reserve officials. The yield on the benchmark U.S. bond yield topped 2.9%, the levels seen in the last month.

GBP/USD set for weekly losses

The GBP/USD pair tests one month low below 1.1800. On the daily chart, the spot trades in a major downtrend.

The double support near 1.179, resulted in a bounce back toward the 1.1820 level. However, the downside remains intact. The bearish sentiment is confirmed by the crossover below the critical 20-day and 50-day EMA crossover.

The RSI (14) trades at 31 near the oversold zone.

A weekly close below 1.1800 would amplify the selling toward 1.1600.

On the flip side, any uptick in the momentum oscillator could see a pullback toward 1.1850.