GBP/USD faces barricades around 1.1850 as DXY eyes rebound ahead of US Retail Sales

• GBP/USD has picked offers around 1.1850 as the DXY is attempting a rebound ahead of US Retail Sales.
• A preliminary estimate for the US Retail Sales is 0.8% vs. -0.3% released earlier.
• Political instability and recession fears have shifted the pound bulls on the tenterhooks.

The GBP/USD pair has slipped to near 1.1830 after facing hurdles modestly above 1.1850 in the Asian session. The cable has displayed a subdued performance after a less confident rebound from Thursday’s low at 1.1760. Generally, a soft rebound turns quickly into a downside move as the market participants consider that trade a bargain sell.

The cable is expected to witness a steep fall after slipping below the intermittent support of 1.1820 as the US dollar index (DXY) is set to rebound after a modest correction. The DXY witnessed a steep fall on Thursday after printing a fresh 19-year high of 109.26.  A rebound is expected amid higher consensus for US Retail Sales.

The US Retail Sales are seen at 0.8% for June, higher than the prior release of -0.3%. Fuel prices have shifted into bearish territory now but remained extremely solid in June. Therefore, higher energy bills must have been responsible for the higher consensus for the economic data. Also, higher Consumer Price Index (CPI) data released on Wednesday is sufficient to support higher forecasts for Retail Sales.

On the pound front, political instability and recession fears have shifted the pound bulls on the tenterhooks. The resignation of UK PM Boris Johnson has trimmed the confidence of the households in the growth prospects of the economy. Also, the scorching inflation rate has triggered recession fears. More rate hikes from the Bank of England (BOE) will remain on the cards and it would be interesting to note whether the economic catalysts would support BOE for policy tightening unhesitatingly.