The Pound Sterling struggled against the US Dollar amidst growing speculation for Donald Trump’s victory in the upcoming US elections. The GBP weakened to near the 1.2900 support level after a corrective move from an annual high of 1.3044. The improved speculation for Trump’s win has increased the appeal of the US Dollar, causing the Cable to face selling pressure. In contrast, the Pound Sterling remained firm against other major currencies, except for the Japanese Yen and the US Dollar.
Investors are anticipating Trump’s victory due to US President Joe Biden’s endorsement of Vice President Kamala Harris for the elections. The expectations for Trump’s win is causing the US Dollar to strengthen, with the US Dollar Index recovering its intraday losses. However, there is speculation that the Federal Reserve will start reducing interest rates from the September meeting, which could limit the upside in the US Dollar.
Meanwhile, the UK Retail Sales data for June showed a sharp decline, raising doubts over whether the Bank of England (BoE) will leave interest rates unchanged in its August policy meeting. Despite the fall in Retail Sales, the Pound Sterling remains strong due to political stability in the UK economy. The decline in Retail Sales is expected to impact consumer inflation and price pressures, but wages are still growing at a higher pace.
Looking ahead, the next trigger for the Pound Sterling will be the preliminary S&P Global/CIPS PMI data for July. The report is expected to show an expansion in the Manufacturing PMI, which could further impact the performance of the Pound Sterling. In terms of technical analysis, the Pound Sterling struggles to hold the 1.2900 level against the US Dollar. The GBP/USD pair weakened after facing a sell-off from a fresh annual high of 1.3044.
In conclusion, the Pound Sterling faces uncertainty amid speculation for Trump’s victory and a decline in UK Retail Sales. The upcoming US data-packed week will be closely monitored by investors for further insights into the market trends. Despite the challenges faced by the Pound Sterling, the UK economy’s political stability continues to provide some support. Investors will need to monitor key economic data releases to anticipate any potential market movements in the coming days.
