GBP/USD retreats after BoE’s dovish hike

The Pound Sterling is losing ground against the US dollar even after the BoE lifted rates by 0.50%, a hike that is generally looked upon as dovish. US Retail Sales data for November is disappointing though it indicated the effects of the Fed’s policy.

The GBP/USD pair’s decline towards the confluence of the 20/200-DMAs, could pave the way for retesting 1.2400

The Pound failed to gain traction or benefit from the BoE’s 50 bps rate hike, though risk aversion supports the dollar, after hitting six-month lows around 103.448. Mixed US economic data in addition to the latest rate hike by the Fed impacted the GBP. At the time of writing, the GBP/USD is trading at 1.2175, down more than 2%.

US equities declined after the Fed’s decision, which opted to slow the rate increases but updated its terminal rate.

The US economy experienced a hindrance in November as Retail Sales unexpectedly contracted, down 0.6% MoM compared to the anticipated -0.1%. Meanwhile, Initial Jobless Claims rose by 211K despite estimates of 230K, revealing the strength and robustness of today’s labor market acknowledged by Fed Chair Powell during his Wednesday press conference.

Earlier, the Philadelphia and New York Business Indexes reported disappointing figures, with the former sliding 13.8 points below expectations while the latter dropped 11.2, further away from its predicted contraction rate of 1%.