GBPUSD retreats towards 1.1750 ahead of key UK data, Autumn Statement

• GBPUSD eases from the highest levels in 11 weeks.
• Chatters over Fed’s pivot risk-on mood previously drowned the US dollar.
• UK’s Chancellor Jeremy Hunt placates fears from upcoming financial bill, BOE Governor Andrew Bailey favored further rate hikes.
• US Retail Sales, UK data dump could help bulls to keep the reins but risk catalysts are more important for clear directions.

GBPUSD begins the key week on a back foot, as it retreats from the highest levels since late August 26 to 1.1775, amid anxiety ahead of crucial data/events. That said, the Cable pair posted the biggest weekly gains since March 2020 in the last amid broad US dollar weakness and optimism surrounding the UK government’s ability to takeout Britain from the recession, despite the short-term pain.

Having witnessed mixed UK data for growth and industrial output on Friday, UK Finance Minister Jeremy Hunt tried to defend his plans for the budget, as most of it includes filling the Great Britain Pound (GBP) 50 billion mismatches in government finances. In doing so, the Tory diplomat turns down the chatters over ending the energy bill while also mentioning that the financial plan will not be all bad news. On Friday, UK Chancellor Hunt said, “I am under no illusion that there is a tough road ahead – one which will require extremely difficult decisions to restore confidence and economic stability.”

Additionally, the preliminary prints of the UK’s Q3 GDP signaled that the British economy contracted by 0.20% QoQ versus -0.50% market consensus and the previous expansion of the 0.20% QoQ figure. It should be noted that the monthly GDP came downbeat to -0.6% MoM for September and other scheduled data from the UK also were mixed, which in turn should have restricted the market's reaction.

Following the data, Bank of England (BOE) policymaker Jonathan Haskel said on Friday that it's important for the monetary policy to stand firm against the risk of persistent inflationary pressure, as reported by Reuters. Further, BOE Governor Andrew Bailey said on Friday, “more increases to interest rates likely in the coming months.”

It should be noted that UK Prime Minister Rishi Sunak’s (PM) academics and the credence among Conservatives join the latest efforts to smoothen Brexit talks to also favor the GBPUSD bulls.

On the other hand, the first readings of the University of Michigan Consumer Confidence Index for November dropped to 54.7 versus 59.5 market expectations and 59.9 previous reading.

Not only the downbeat US data but talks of easing virus controls in China also boosted the risk appetite on Friday and exerted downside pressure on the US dollar. Earlier in the week, the softer US inflation data backed the talks of the Fed’s pivot and drowned the US currency. Recently, Fed Governor Christopher Waller said Fed can begin to consider moving at a slower pace.

Moving on, this week is important for the GBPUSD traders not only because it has the key data like Retail Sales and Consumer Price Index (CPI) for October but also because it will offer the Autumn Statement. Additionally, the Group of 20 Nations (G20) meeting in Bali will be eyed too as the UK and Europe are preparing to snub Russia there.

Given the recent positive sentiment and the talks of easy rate hikes from the US Federal Reserve (Fed), GBPUSD is likely to remain firmer despite the week-start consolidation.

Technical analysis

A daily closing beyond the 100-DMA and a downward sloping trend line from late May, respectively around 1.1660 and 1.1750, directs the GBPUSD buyers towards the late August swing high near 1.1900.