GBPUSD clings to weekly gains near 1.1900 ahead of UK Retail Sales

• GBPUSD picks up bids to reverse the previous day’s losses, prints two-week uptrend.
• UK’s Autumn Budget failed to impress bulls, optimism surrounding British government-BOE partnership favor upside moves.
• Sluggish markets allow US dollar to pare recent gains despite hawkish Fedspeak.
• Firmer UK Retail Sales could allow buyers to keep the reins.

GBPUSD buyers keep the reins around 1.1900 while bracing for the second weekly gain as traders reassess positives from the UK’s fiscal plan during early Friday’s sluggish trading. Also likely to have favored the Cable pair could be the hopes of witnessing further UK Retail Sales figures, the key constituent of the British Gross Domestic Product (GDP).

On Thursday, UK Finance Minister Jeremy Hunt presented the Autumn Budget outlining spending cuts and tax hikes worth £55 billion to parliament and started the announcements by saying, “We will take difficult decisions to tackle inflation.” The British Diplomat also mentioned, “In the short term, as growth slows and unemployment rises, we will use fiscal policy to support the economy.”

However, comments suggesting no remit change for the Bank of England (BOE) and a likely duet with the government to bolster the economic growth seemed to have teased the British Pound (GBP) buyers as of late. It’s worth noting that UK Prime Minister Rishi Sunak’s credibility due to sound financial knowledge and better political bonding add strength to the GBPUSD run-up.

On the same line, an improvement in the UK’s GfK Consumer Confidence for November, from -47 to -44, could have also underpinned the Cable pair’s latest run-up.

Alternatively, US President Joe Biden’s attempt to ease student loans, as well as the latest survey on the Fed’s next move, seemed to have challenged the US Dollar despite the recently hawkish comments from the Federal Reserve (Fed) officials.

CNBC came out with the news suggesting that the Biden Administration will ask Supreme Court to allow the student loan debt relief program to resume. On the other hand, downbeat prints of the Philadelphia Fed Manufacturing Index and housing numbers for October might have raised doubts about the recently hawkish Fedspeak. Furthermore, the latest Reuters poll for the US Federal Reserve (Fed) states that the Federal Reserve will downshift in December to deliver 50 basis points (bps) interest rate hike, but a longer period of US central bank tightening and a higher policy rate peak are the greatest risks to the current outlook.

Elsewhere, questions over China’s easing of Covid restrictions despite more cases of the virus and the fears surrounding Russia join the light calendar to restrict the market’s moves.

Against this backdrop, the benchmark US 10-year Treasury yields bounced off a six-week low before staying mostly unchanged at 3.77% whereas the S&P 500 Futures remains indecisive by the press time.

Looking forward, GBPUSD remains on the bull’s radar amid hopes of a firmer UK Retail Sales figure for October, expected 0.0% MoM versus -1.4% prior. However, the hawkish Fedspeak and the firmer US Treasury yields tease the bears and hence a negative surprise could be reacted with greater force.

Technical analysis

Despite the latest grinding towards the north, GBPUSD bulls remain cautious unless the quote crosses the five-month-old resistance line, around 1.2000 by the press time.