GBP/USD faces barricades around 1.2000 as investors await UK Retail Sales and US PMI

• GBP/USD has shifted into a corrective phase as the DXY has performed stronger in morning trade.
• Pre-anxiety of an interest rate decision by the Fed is supporting the DXY.
• UK Retail Sales may tumble despite soaring price pressures.

The GBP/USD pair has witnessed selling pressure while attempting to surpass the psychological resistance of 1.2000 in the Asian session. Earlier, the cable displayed a vertical upside move after a responsive buying action from a low of 1.1890 on Thursday.  The asset is expecting a corrective move but that doesn’t warrant a bearish reversal.

The US dollar index (DXY) has witnessed a decent buying action in its opening hour as investors are betting over a rate hike by the Federal Reserve (Fed) next week. No doubt, the odds of a rate hike by 100 basis points (bps) have trimmed significantly after a fall in long-run inflation expectations in the US. However, current price pressures are still devastating and need to get fixed sooner. Therefore, the Fed may maintain its status quo and may announce a rate hike by 75 bps.

In today’s session, investors' focus will remain on the US S&P PMI data. The Global Composite data is seen at 51.7, lower than the prior release of 52.3. The Manufacturing PMI may slip to 52 vs. 52.7 recorded earlier. While the Services PMI is expected to display a mild correction to 52.6 against the former figure of 52.7. This will keep the DXY on the back foot.

On the pound front, the focus will remain on the Retail Sales data. A preliminary estimate for the economic data is -5.3% more vulnerable than the prior release of -4.7%. It is worth noting that soaring energy bills are already pushing Retail Sales higher. Runaway inflation should have elevated the estimate for Retail Sales. However, lower consensus indicates that the overall demand is so much low that even the price pressures are unable to lift them above their prior release.