Fundamental anticipation ahead of next week’s FOMC decision has left the GBP/USD pair stuck in a tight range. On Thursday, the pair pulled back towards the lower bound of its recent range as US retail sales for August came in above expectations.
The pullback sparked some volatility in the markets and boosted the US Dollar to a 3-week high, lifting the greenback above its rivals.
GBP/USD range is not new
Since crossing the 1.36 line back in February, this range has been touched on several times. The pair’s bullish movement in the last few weeks has waned off, leaving the GBP/USD looking rather dull at its current levels. Its RSI (relative strength index) shows a massive lack of momentum as it staggers around its mid-point.
While the position of the pair’s moving averages suggest some bullishness in the short-term, its longer-term remains flat and slightly tilted downwards.
The price action of the GBP/USD will largely depend on the FOMC (Federal Open Market Committee) decision next week and is expected to be very volatile.
UK retail sales fall
In the UK, the value of inflation-adjusted retail sales unexpectedly dropped 0.9% in August. Since reaching its peak in April as restrictions eased in the UK, sales have continued falling, showing that consumer spending has dropped in the third quarter.
With retail sales down, will the Bank of England will start reducing its bond purchases at its meeting next week?
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