Ella 
During the Asian session on Monday, GBP/USD was trading around 1.2160. However, GBP/USD found resistance following weak UK retail sales data for September released on Friday. The pound has managed to regain ground against the weak dollar.
UK retail sales showed a monthly decline of 0.9%, in sharp contrast to expectations of -0.1%, while UK retail sales edged up 0.4% in August. UK retail sales recorded an annual rate of -1.0%, missing market expectations that UK retail sales were stagnant.
The drop in retail sales points to the financial pressure on households from high inflation and rising borrowing costs. A sharp decline in consumer spending could have a clear impact on consumer inflation expectations. Due to weakening consumption, there is speculation that the Bank of England (BOE) may be inclined to maintain interest rates at the current 5.25% level at its policy meeting in November.
The U.S. dollar index attempts to recover recent losses, which may be supported by strong U.S. economic data. In addition, U.S. Treasury yields have strongly boosted the dollar. As of press time, the 10-year U.S. Treasury yield was 4.96%, up 0.92%.
The GBP/USD currency pair was supported after Federal Reserve Chairman Jerome Powell said on Thursday that the central bank had no immediate plans to raise interest rates. Powell also mentioned that further tightening of monetary policy may be necessary if there are signs of further growth or the labor market has stopped improving.
Atlanta Fed President Raphael Bostic also believed on Friday that the Fed is unlikely to cut interest rates before the middle of next year. Philadelphia Fed President Patrick Harker reiterated his preference to keep interest rates unchanged.
In addition, Cleveland Fed President Loretta Mester said the U.S. central bank is “at or near the peak of its interest rate hike cycle.” However, Mester acknowledged that the data released last week may affect the Fed’s future monetary policy decisions.
Market participants will be closely watching the U.S. S&P Global Purchasing Managers’ Index (PMI) on Tuesday, third-quarter gross domestic product (GDP) on Thursday and core personal consumption expenditures (PCE) on Friday. In the UK, jobless claims, employment changes and the S&P Global/CIPS PMI will also be watched.
