GBP/USD refreshes daily low after US Retail Sales, around mid-1.2000s ahead of FOMC minutes

• GBP/USD witnesses an intraday turnaround and retreats nearly 100 pips from the daily high.
• The USD stands tall near the monthly peak and turns out to be a key factor exerting pressure.
• The US Retail Sales fail to provide any impetus as the focus remains on the FOMC minutes.

The GBP/USD pair extends its intraday retracement slide from the vicinity of mid-1.2100s and continues losing ground through the early North American session. Spot prices drop to the 1.2050-1.2045 region, or a fresh daily low in the last hour, reversing a major part of the overnight recovery gains from the monthly low.

The US dollar regains some positive traction and inches back closer to its highest level since late July touched the previous day. This overshadows hotter-than-expected UK consumer inflation figures and attracts fresh selling around the GBP/USD pair. Expectations that the Fed would stick to its policy tightening path, along with a fresh leg up in the US Treasury bond yields and the risk-off impulse, continue to underpin the safe-haven buck.

The USD holds on to its modest intraday gains after the US Census Bureau reported that US Retail Sales remained flat in July, missing expectations for a modest 0.1% increase. A slight disappointment, however, was largely offset by unexpected growth in sales excluding autos, which rose 0.4% during the reported month. Adding to this, Control Group sales climbed 0.8% during the reported month against consensus estimates pointing to a 0.6% rise.

The data might have lifted bets for a larger Fed rate hike move at the September meeting, which remains supportive of elevated US Treasury bond yields. That said, traders seem reluctant to place aggressive bets and prefer to wait for the FOMC meeting minutes, due for release later during the US session. This, in turn, suggests that the GBP/USD pair is more likely to find decent support and stall the intraday slide near the 1.2000 pivotal support.

Technical levels to watch