GBP/USD retreats from multi-day top near 1.2800 ahead of UK/US inflation clues

• GBP/USD struggles for clear directions at the highest levels since April 2022, snaps three-day uptrend.
• Downbeat US Dollar, hawkish hopes from BoE versus doubts about Fed’s July rate hike previously favored Cable bulls.
• Market’s consolidation of weekly performance, cautious mood ahead of UK/US data prod Pound Sterling traders.

GBP/USD steadies near the highest level in 14 months, making rounds to 1.2780-70 amid early Friday morning in London, as the Cable pair traders await more clues to defend the previous day’s heavy rally. That said, the Pound Sterling rose the most in a week while rising for the third consecutive day to refresh the multi-month high amid broad US Dollar weakness and hawkish concerns about the Bank of England (BoE).

Earlier in the week, a mixed batch of the UK details failed to tame the GBP/USD bulls amid hawkish BoE concerns, mainly due to the previously upbeat inflation numbers. the UK’s Gross Domestic Product (GDP) for April matches 0.2% growth versus -0.3% prior while the Industrial Production slumps during the stated month. That said, the Manufacturing Production also disappoints and so do the Index of Services for three months to April.

That said, US Dollar Index (DXY) picks up bids to pare the biggest daily loss in three months around 102.30, which in turn prods the Pound Sterling buyers. That said, the quote dropped heavily the previous day on mixed US data and the market’s lack of conviction about the Fed’s July rate hike, even if the policymakers did utter the same on Wednesday.

On Thursday, US Retail Sales growth marks an increase of 0.3% for May versus -0.1% expected and 0.4% previous readings while the Core readings, mean Retail Sales ex Autos, match 0.1% market forecasts for the said month, compared to 0.4% prior. Further, NY Fed Empire State Manufacturing Index jumps to 6.6 in June versus -15.1 expected and -31.8 prior whereas Philadelphia Fed Manufacturing Index drops to -13.7 for the said month from -10.4 prior and compared to -14 market forecasts. Additionally, US Industrial Production for May cools down to -0.2% against 0.1% estimated and 0.5% prior while Initial Jobless Claims reprints the upwardly revised figures of 262K for the week ended on June 09 versus 249K expected.

Against this backdrop, market players appear more hawkish on the BoE than the Fed and keep the Cable on the bull’s radar despite the latest pullback in the prices.

Looking ahead, UK’s Consumer Inflation Expectations for June will precede the preliminary readings of the Michigan Consumer Sentiment Index (CSI) and five-year inflation expectations for the said month to direct intraday GBP/USD moves.

Technical analysis

Although the overbought RSI suggests a pullback in the GBP/USD price, the pair buyers remain optimistic unless witnessing a daily closing below the previous resistance line stretched from late January, around 1.2730-25 at the latest.