GBP/USD faces barricades around 1.1500, focus is on US Retail Sales

• GBP/USD has sensed a moderate selling pressure around 1.1500 ahead of US Retail Sales data.
• A lower reading of UK CPI for one time is insufficient to declare exhaustion in price pressures.
• The Fed is preparing for a full percent rate hike to fix the core CPI chaos.

The GBP/USD pair is inching modestly towards the upside after a rebound from 1.1526 in the late New York session. The pair is expected to remain sideways as investors are awaiting the release of the US Retail Sales data. On a broader note, the asset recovered firmly after a dual-test of a low of 1.1480 on Wednesday. A decline in the UK inflation data against the expectation of an increment supported the pound bulls.

The headline UK Consumer Price Index (CPI) data landed at 9.9% lower than the forecasts of 10.2% and the prior release of 10.1%. A decline in headline CPI in times when the economy is going through the severe pain of sky-rocketing energy bills is music to the ears of the Bank of England (BOE) policymakers. The downside reading has come as a sigh of relief for the UK economy. Earlier, the market veterans anticipated an inflation rate of 13-14% for the pound zone. Therefore, tagging the situation as exhaustion in the price pressures won’t be justifiable.

Meanwhile, the US dollar index (DXY) has turned sideways after a juggernaut rally. The DXY is expected to remain at elevated levels as the street has started speaking about a full percent rate hike by the Federal Reserve (Fed) in its September monetary policy meeting. The Fed has reached back to the square despite tightening its policy over the past six months. The catalyst which has triggered fears for the Fed is the advancing core CPI data, which landed at 6.3%, higher than the forecasts of 6.1%.

In today’s session, investors’ entire focus will be on the US Retail Sales data. As per the preliminary estimates, the economic data has not shown any growth in retail demand. A stagnancy in consumers’ demand is not fancy for the economy but a sign of decline in the confidence of the consumers in the economy.