GBP/USD recovers some ground after hitting 1985’s lows, ahead of next week’s BoE/Fed decisions.

GBP/USD is set to finish the week with more than 1.50% losses, ahead of BoE’s and Fed decisions.The University of Michigan Consumer Sentiment improved vs. the last month’s reading, while inflation expectations slid.

The British pound trims its earlier losses against the greenback after hitting a 37-year low around 1.1350, and recovers the 1.1400 thresholds after registering weaker-than-estimated retail sales, fueled speculations of the UK’s tapping into a recession. At the time of writing, the GBP/USD is trading at 1.1395, below its opening price, by 0.62%.

A risk-off impulse keeps most G8 currencies heavy. The greenback pared some earlier losses, as shown by the US Dollar Index, almost flat at around 109.704, yet still 0.04% down. US economic data released by the University of Michigan showed that US consumers remain slightly upbeat regarding the US economy. The Consumer Sentiment in September rose to 59.5, below estimates by a notch but better than the 58.6 achieved in August.

In the meantime, US economic data released in September further cements the case for a Federal Reserve’s 75 bps rate hike in the next week. Also, sources quoted by Bloomberg commented that the US central bank might hike by a large size in November.

Elsewhere, the UK docket revealed that retail sales in August tumbled more than the estimated 0.5% contraction, falling 1.6% MoM, adding to recession fears amidst a tightening cycle by the Bank of England.

What to watch

The UK economic docket will feature the Bank of England’s monetary policy decision next week. Money market futures expect a 50 bps hike, but pressures are mounting that the central bank could go 75 bps. The Federal Reserve is expected to raise rates by 75 bps on the US front, with minimal chances of going a full percentage point.

GBP/USD climbs above 1.1400 as dollar loses strength

GBP/USD managed to stage a rebound from the multi-decade low it touched at 1.1350 earlier in the day and rose above 1.1400. The renewed dollar weakness following the UoM Consumer Sentiment Survey fuels the pair’s recovery ahead of the weekend.


EUR/USD extends rebound beyond parity

EUR/USD has gathered recovery momentum and climbed above parity during the American trading hours on Friday. The greenback stays on the backfoot amid week-end flows and the soft inflation components of the UoM survey, allowing the pair to push higher.


Gold rises toward $1,680 as US yields edge lower

Gold gained traction and turned positive on the day above $1,670 in the American session on Friday. The UOM’s Consumer Sentiment Survey showed declines in one-year and five-year inflation expectations, causing US yields to push lower and lifting XAU/USD.

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