The GBP/USD currency pair went above 1.2000 as risk flows come back, which is terrible for the US dollar. Even though the Bank of England (BoE) raised rates by 50 basis points in August, a broad array of political and economic worries remains.

The cable is going back up after reaching 1.2064 on Friday. Since the US Dollar Index (DXY) has been flat for a week, the asset is moving all over the place.

In the past few months, the DXY has gone up because interest rates and economic indicators have been reasonable. A rate hike of 1% has been ruled out for now by the Fed. Investors still think rates will go up by 75 basis points on Wednesday.

The data on the US economy is not good. Wall Street isn’t making much money. Google has stopped hiring, and Ford is going to fire 8,000 people. It could slow the creation of new jobs and the overall job market, which might not be strong enough to support rate hikes from the Fed.

The pound bulls lost strength after the UK retail sales report came out. The data on the economy was -5.8 per cent lower than expected (-5.3 per cent). Rising energy costs are making retail sales go up. Retail Sales may rise because inflation is getting out of hand. The lower the consensus, the more likely demand is so low that price pressures can’t raise them above their last release.

Conclusion

Investors are worried that the Northern Ireland Protocol Bill could start a trade war with the EU. It is because of the problem with the cost of living. A slowdown in the world economy could also make the dollar a safer place to put your money, limiting GBP/USD gains.