GBP/USD regains 1.3200 to snap two-day downtrend ahead of UK Retail Sales

• GBP/USD takes the bids to refresh intraday high, prints the biggest daily gains in three.
• Sluggish Asian session triggered market’s consolidation amid steady yields.
• UK, US PMIs came in mixed to challenge central bankers but Ukraine-led risk-aversion favored bears previously.
• UK Retail Sales for February, Fedspeak and Eurogroup meetings will be important to watch for intraday directions.

GBP/USD bulls retake controls after a two-day absence, up 0.26% intraday around 1.3220 during early Friday morning in Europe.

The cable pair’s latest gains could be linked to the market’s paring of the recent losses amid USD pullback, as well as pre-data anxiety. However, cautious sentiment prevails over the Ukraine-Russia fears, also due to the recently mixed UK data, to challenge the pair buyers.

The US Dollar Index (DXY) drops 0.38% intraday to 98.41 at the latest as the market’s struggles to extend the weekly gains amid inactive yields. That said, the US 10-year Treasury yields remain sidelined around 2.36% by the press time while the S&P 500 Futures fail to track Wall Street’s gains, nor does it portray the risk-off mood, by taking rounds to 4,510-15.

It’s worth noting that the GBP/USD bears cheered mixed UK data and the broad US dollar strength the previous day.

The UK’s Markit Manufacturing PMI  declined to 55.5 for March versus 58.0 prior readings and the market expectation of 56.7. Further, the Services PMI rose beyond 60.5 previous outcomes and 58.0 market forecasts to 61.0 during the stated month. Earlier of Friday, Reuters said, “The GfK Consumer Confidence Index fell for the fourth month in a row to -31 from -26 in February, its lowest since November 2020, deep in the coronavirus pandemic.”

On the other hand, Markit Manufacturing PMI for the US rose to 58.5 in March compared to 57.3 prior and 56.3 market forecasts. On the same line, Services PMI also rose to 58.9 versus a softer forecast of 56.0 versus 56.5 prior. With this, the Composite PMI increased to 58.5 from 55.9 previous. However, US Durable Goods Orders printed -2.2% MoM growth figures for February versus forecast of -0.5% and January's 1.6% gain.

The Western push to take collective measures to stop the Russian invasion of Ukraine weighs on the market sentiment and underpins the US dollar’s safe-haven demand. However, the divide among the Eurozone members restricts the likely risk-off mood. On the same line could be hopes that the latest compulsion on Russia may result into positive progress in the peace talks.

In addition to the risk catalysts, the UK Retail Sales for February, expected to ease to 7.8% YoY, from 9.1%, will also be important as downbeat figures may join the likely resurgences of risk-off mood to weigh on the GBP/USD prices.

Technical analysis

Successful trading beyond the 10-DMA level of 1.3156 directs GBP/USD buyers towards the weekly top surrounding 1.3300.