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

By FXStreet FXStreet (Mumbai) – The GBP/USD pair witnessed a break above the key level of 1.5248 (50% of Apr-Jun rally) on broad based USD weakness in Asia. The immediate focus is now on the UK retail sales figure, which is of primary importance to policymakers as it throws light on the domestic demand.

Odds of weak data are high

The headline figure is seen contracting 0.2% month-on-month in October. The annualised growth is seen slowing to 4.5% from Sep’s 6.5%. The odds of a weak data are high as the spike in consumption due to rugby world cup is seen fading.

The related indicators – GFK consumer sentiment survey, Major Purchases Index, CBI distributive trades survey, and BRC-KPMB retail sales monitor – have already pointed to a slowdown in retail turnover. Consequently, the odds of a weak data are high, though there is always a possibility of a slower-than-expected drop.

GBP/USD Technical Levels

At 1.5275, the pair faces a risk of a drop below 1.5248 (50% of Apr-Jun rally) if the retail sales print weaker-than-expected. In this case, the pair could find support in 1.5180-1.52 range. Meanwhile, a fresh rally to 1.5306 (50-DMA) – 1.5339 (200-DMA) could be seen in case …read more

Source:: FX Street