GBP/USD Declines Amid Mixed UK Retail Sales Data and Escalating Geopolitical Tensions

The Pound Sterling faced downward pressure against the US Dollar during the mid-North American session, experiencing a turbulent trading day marked by escalating tensions in the Israel-Iran conflict. Against this backdrop, central bank announcements, particularly from the Bank of England (BoE) and the Federal Reserve (Fed), continued to influence market sentiment. At the time of reporting, the GBP/USD pair traded at 1.2376, registering a decline of 0.48%.

Amidst growing concerns over geopolitical instability, the GBP/USD pair encountered renewed selling pressure as reports surfaced of explosions over an Iranian city, purportedly due to an attack by Israel. However, Iranian authorities downplayed the incident, signaling no intentions of retaliatory action. The GBP/USD briefly plummeted to 1.2388, marking a five-month low, before staging a partial recovery.

Despite comments from BoE’s Deputy Governor Dave Ramsden addressing the implications of forex on inflation and the bank’s commitment to its mandate, the Pound struggled to find support, dipping to five-month lows at 1.2372. Ramsden acknowledged the bumpy disinflation process but emphasized that risks remained tilted to the downside.

Meanwhile, Chicago’s Fed President Austan Goolsbee adopted a neutral stance, providing marginal support for the US Dollar. Goolsbee highlighted a stall in progress on inflation, suggesting a cautious approach to monetary policy decisions to allow incoming data to illuminate the disinflation process.

In economic news, British Retail Sales data for March revealed signs of stagnation compared to February’s figures, falling short of analysts’ expectations. While monthly sales remained flat against a projected growth of 0.3%, core sales saw a decline from 0.3% to -0.3%. However, on an annual basis, sales recorded a modest uptick of 0.8%, indicating a slight improvement from February’s decline.

From a technical standpoint, the GBP/USD pair faces downward pressure following a breach below the critical 1.2400 level. Unless buyers regain control above this threshold, sellers maintain dominance. Key support levels include the November 17 low of 1.2373, followed by the November 10 low of 1.2187. Conversely, a resurgence in buying activity above 1.2400 could pave the way for a challenge of resistance levels at the April 18 high of 1.2484 and the psychological barrier of 1.2500.

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