FXStreet: GBP/USD declines due to a weak U.K. economy

16 December 2022 233
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Source: FXStreet

Author: Haresh Menghani

Article: Original article

Publication date: Friday, December 16, 2022

According to a report of the UK Office for National Statistics, November’s retail sales fell by 0.4% against the expectations of a 0.3% increase and the growth of 0.9% recorded a month earlier. In addition, sales, except for auto motor fuel, suddenly dropped by 0.3% month-over-month compared to the growth of 0.7% in October. These data confirm a gloomy outlook for the U.K. economy, which along with the Bank of England’s dovish rate hike by 50 basis points on Wednesday, supports the prospects of a significant decline in the GBP/USD pair.

Meanwhile, on Wednesday, the Fed became more aggressive and indicated its intention to continue increasing rates in order to defeat inflation. In addition to growing risks of recession, it advances the U.S. dollar’s bulls and raises confidence in a negative forecast for the GBP/USD pair. Consequently, any further upward move could be considered an opportunity to sell the currency pair.

Forecast: the GBP/USD pair is likely to decline

This content is for informational purposes only and is not intended to be investing advice.

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