- GBP/USD declined following weak borrowing data by the United Kingdom.
- Mortgage and consumer lending saw a sharp drop in April.
- Investors should now watch U.S consumer confidence data.
The British pound saw a slight retreat on Tuesday as massive recoveries paused. GBP/USD plummeted towards the 1.2580 lows, briefly beneath this week’s 1.2660 high. However, the current price stayed nearly 3.68% high from this month’s lowest level.
U.S Dollar Strengthens
The primary reason behind GBP/USD retreat was the somewhat stronger U.S dollar. Increasing market volatility saw the dollar index surging by 0.25%. The increase emerged as the latest plunge took a pause. United States’ latest data shows the economy under pressure as it tries to recover.
Last week’s housing data showed existing plus new home sales declined by over 10% during April amid fading demand. Other stats indicated slowed industrial production as inflation increased to its highest mark in more than four decades.
The economy might suffer continued weakness as the U.S Fed maintains its stiffer policy stance. The bank will likely hike the rates (by 0.50%) in the coming three meetings before moving to 25bp increments. Also, the somewhat weak mortgage stats had GBP/USD sliding.
The BOE revealed mortgage approvals dropped from March’s 69.53K to April’s 65.97K. The dropped surpassed the $69K median estimate and was the worst seen in months.
The duration saw mortgage lending plunging from 6.44 billion pounds to 4.12 billion pounds, whereas individuals’ net lending dropped from 8.3 billion pounds to 5.5 billion pounds. The figures show the nation’s economy slowing down, with the Bank of England continuing to hike rates.
For now, GBP/USD will respond to the coming meeting between President Biden and Jerome Powell. The consumer confidence stat will impact the pair.
The one-hour chart reveals GBP/USD on a massive bearish bias within the past couple of hours. The pair moved beneath the ascending trend-line.
Moreover, GBP/USD dropped under the 25 moving average, whereas the Relative Strength Index swayed below the oversold territory. Thus, the asset can keep plunging, with bears eyeing 23.6% FIB retracement mar at 1.2545.
Stay tuned for the latest financial news.