GBP/USD snaps winning streak on Monday as bidders shy away from 1.30

• GBP/USD chilled a three-day win streak, kicks off new week with a cautious tone.
• Fedspeak drives broader market sentiment as investors hope for rate cuts.
• US Retail Sales, UK CPI inflation round the corner into the midweek.

GBP/USD took a breather from bullish momentum on Monday, pulling back just shy of the 1.3000 handle after FX markets took a break from Greenback selling to reconsider recent moves and re-weigh odds of a September rate cut from the US Federal Reserve (Fed).

Forex Today: Markets’ attention shifts to data and Fedspeak

Fedspeak dominated market focus to kick off the new trading week, with Fed Chairman Jerome Powell giving a nod of the head to recent progress on inflation. Fed Chair Powell was followed up by a low-impact appearance from San Francisco Fed President Mary Daly, and both key Fed policymakers reiterated a lack of forward guidance on the timing of Fed rate cuts, doubling down on how decisions would be made on a meeting-by-meeting basis. 

Read more:
Fed's Powell: Decisions to be made on a meeting-by-meeting basis
Fed's Daly: Confidence is growing that inflation is heading lower

According to the CME’s FedWatch Tool, rate markets are pinning all of their hopes on a September rate cut. Rate markets have fully priced in a September rate trim, with 100% odds of at least a 25 basis point decline in the fed funds rate when the Federal Open Market Committee (FOMC) meets on September 18.

US Retail Sales on Tuesday will wrap up the recent bout of US key data releases from the past week, and markets are expecting a continued cooling in US activity data. US Retail Sales are forecast to flatten to 0.0.% MoM in June.

Early Wednesday will bring the latest iteration of UK Consumer Price Index (CPI) inflation, with MoM headline CPI inflation in June expected to tick down to 0.1% from 0.3%. After that will be UK labor and wages figures on Thursday, and Friday will wrap up the GBP’s representation on the economic data docket with UK Retail Sales.

GBP/USD technical outlook

Cable bidding took a break on Monday, snapping a three-day winning streak and etching in a thin bearish candle after the pair closed in the green for all but two of the previous 12 consecutive trading days. GBP/USD’s swing low towards 1.2600 in late June failed to pierce the major price handle, sending bullish bids higher, and Monday trading managed to eke out a fresh 12-month high at 1.29949 before pulling back and rotating lower just shy of the 1.3000 key price level.

GBP/USD daily chart