UK retail sales preview: What to expect of GBP/USD?

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 22, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
    Likes Received:
    FXStreet (Mumbai) - The GBP/USD is trading on a positive note and trading above its 5-DMA for the first time in three weeks ahead of the UK December retail sales report.

    Weak retail sales could halt correction

    The ongoing corrective rally in the GBP/USD pair may run into fresh offers if the UK retail sales fail to meet the market expectations.

    Month-on-month the UK retail sales are seen contracting 0.3%. Year-on-year, the retail turnover growth is seen slowing to 4.3% from Nov’s 5.0%. Core retail sales are also seen contracting. A strong retail sales figure is a last hope for whatever little number of hawks in the market who believe BOE could hike rates this year.

    If the month-on-month figure contracts as expected/or more than expected, the corrective rally could derail. On the other hand, a positive surprise could fuel the ongoing corrective rally in Sterling.

    GBP/USD Technical Levels

    At the time of writing, the pair was trading at a daily high of 1.4236. The immediate resistance is seen at 1.43-1.4310 (50-MA on 4-hr + 10-DMA). A break higher would see the pair test offers at 1.4351 (23.6% of 1.5230-1.4079). A strong retail sales number could help the pair chew through offers at 1.4351 and test 1.44 handle.

    On the other hand, a break below 1.4219 (support on the hourly chart), could see the pair test bids at 1.4184 (hourly 50-MA). A weaker-than-expected figure could trigger a break below 1.4184 and send the pair down to previous session’s low of 1.4079.
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