British Pound gives back UK sales pop as Oil shock returns

The British Pound (GBP) fell back after hitting a high of 1.3375, following positive UK economic data, as investors grappled with the potential impact of an oil supply shock. The GBP/USD pair is now trading at 1.3356, down 0.03%. A Bloomberg report highlighted concerns about oil supplies, with Saudi Arabia warning it would withhold deliveries for next month.

Meanwhile, US industrial production remained flat from July to August, registering 0% MoM, falling short of expectations for a 0.3% increase. Fed Chair Kevin Warsh reiterated that the US economy is robust, prompting a 25 basis point hike in interest rates to be set between 3.75% and 4.0%. Money markets now speculate that the Fed may raise rates again in October, with a 55% probability according to Prime Terminal.

The UK's Retail Sales grew by 0.5% MoM in August, surpassing forecasts of a 0.2% decline, bolstering the Pound. However, concerns about upside inflation risks remain, influenced by the US-Iran conflict. The interest rate differential between the US and the UK is currently in favor of the Greenback, as it has widened since both central banks’ September meetings.

Technical analysis indicates that GBP/USD could face resistance at the descending trend-line near 1.3455, followed by a cluster of SMAs and broken trend lines at 1.3488 and 1.3701.