GBP/USD sinks below 1.3500 as King Dollar regains strength post-Fed

• GBP/USD trades below 1.3480 as Dollar steadies near 97.60 after Fed's 25 bps rate cut.
• UK Retail Sales beat expectations at 0.5% MoM, but fiscal worries cap Sterling's upside against Greenback.
• Quad witching adds volatility risks, while traders eye US data and Fed speakers next week.

The British Pound is under heavy pressure of the "King Dollar" on Friday, down 0.52% even though the docket in the US is absent, with just Federal Reserve officials crossing the newswires. UK data although positive, Retail Sales failed to underpin Sterling. The GBP/USD trades at 1.3482.

Sterling drops despite upbeat UK Retail Sales, pressured by broad Dollar recovery and fiscal concerns

Market mood remains mixed amid a quad witching options expiring on Friday, which could trigger volatility in US equity markets. The US Dollar has recovered after failing to three-year lows, in the aftermath of the Fed's monetary policy decision.

Minnesota Fed President Neel Kashkari said that he supported the rate cut his week as risks of an increase in unemployment, warranted some action. He said that it is hard to see inflation climbing much higher than 3% from tariffs and added that if the jobs market improves and inflation rises, the Fed should hold rates. He added that he is open to hike rates if economic conditions warrant.

Meanwhile, Wednesday's Fed's decision to cut rates by 25 basis points was fully priced by market participants, as the Dollar Index (DXY), which tracks the performance of the buck's value against a basket of six currencies, rallied sharply and turned flat on the week at around 97.62.

Across the pond, UK Retail Sales rose 0.5% MoM in August, exceeding forecasts of 0.4%, while sales growth in July was slightly revised down. Despite this, Cable failed to outperform the US Dollar amid growing concerns about Britain's finances.

Next week, the US economic docket will feature S&P Global Flash PMIs, Durable Goods, Jobless Claims, GDP data and the release of the Fed's favorite inflation gauge, the Core PCE. Alongside this, a flurry of Fed officials will hit the media.

On the UK, Flash PMIs, along with Bank of England (BoE) policymakers crossing the wires, are awaited.

GBP/USD Price Forecast: Bearish in the short-term if stays below 1.3500

The GBP/USD shifted from being upward biased and turned negatively in the week. Eventually, the "evening star" drove the exchange rate below 1.3500 and increased the chances of testing the confluence of the 100 and 50-day SMAs around 1.3477/63. A daily close below the latter clears the path to test September 3 low of 1.3332.

Conversely, a GBP/USD daily close above 1.3600, could cement the case for another attempt to challenge the yearly peak at 1.3788.