GBP/USD: More pain ahead on poor Retail Sales, likely recession in Europe

• GBP/USD may print fresh 52-week lows on likely stagflation in Europe.
• The DXY is lackluster on uncertainty over the US CPI numbers.
• The 10-year US Treasury yields have reclaimed 1.85% on expectations of aggressive monetary policy.

The GBP/USD pair has been vulnerable from the last few trading sessions as the Russia-Ukraine war alarmed a situation of recession in Europe. The cable seems to print fresh 52-week lows as the market participants are dumping the Europe domain currencies on the expectation of a ‘stagflation’ situation going forward.

The situation has got worsened now after the US confirmed the prohibition of Russian oil for imports in the US. It is likely that the situation can be taken care of by the nation, which addresses a major portion of their oil demand itself but nations in Europe that bank more upon the oil exploration by Russia may struggle to fulfill their requirement.

Meanwhile, the poor performance from the Like-For-Like Retail Sales by the British Retail Consortium (BRC) has added fuel to the fire. The figure came in at 2.7%, much lower than the market consensus and prior print of 15.2% and 8.1% respectively.

The US dollar index (DXY) is oscillating in a narrow range of 98.67-99.42 as investors are waiting for the US Consumer Price Index (CPI) numbers, which are due on Thursday. It is widely known that US inflation data has a significant impact on the monetary policy action by the Federal Reserve (Fed). Moreover, the 10-year US Treasury yields have surged near 1.86% on rising expectations of an aggressive interest rate decision by the Fed.

The week is full of events for the UK: Gross Domestic Product (GDP), Industrial Production, and Manufacturing Production will be reported on Friday.