Pound Surges as Dovish Fed Expectations Boosted by Weak US Data

The British Pound gained strength on Friday after a batch of US data supported the Federal Reserve's dovish approach. The GBP/USD pair rose by 0.40% to 1.3545, with the US Dollar Index (DXY) falling 0.40% to 99.54.

The decline in consumer sentiment and weak retail sales contributed to the pound's rise. The University of Michigan Consumer Sentiment index fell from 55.2 in July to 51.0, while US Retail Sales dropped 0.6%, below forecasts for a 0.1% increase.

The disappointing data reinforced expectations that the Fed will hold interest rates unchanged, with odds at 70% and a rate hike chance at 30%. The pound's gains were also supported by the UK's GDP growth, which expanded at a 0.3% pace in June, the strongest among G7 developed countries.

The GBP/USD pair is poised to finish the week in the green, with technical analysts pointing to a bullish near-term bias. However, momentum remains constructive but increasingly stretched, suggesting that the pair may face resistance at the rising support trend line turned barrier at 1.3590.