British Retail Sales is considered one of the most important economic indicators. A reading that is higher than the market forecast is bullish for the British pound.
Here are all the details, and 5 possible outcomes for GBP/USD.
Published on Thursday at 8:30 GMT.
Indicator Background
Retail Sales is the primary gauge of consumer spending, a critical component of economic growth. Traders should treat this indicator as a market-mover.
Retail Sales slipped badly in the March release, coming in at -0.5%. This was well below the forecast of 0.4%. The markets are expecting better news from the April report, with an estimate of +0.1%.
Sentiments and levels
With the pound posting tremendous gains in the month of May, we could be in for a downward correction. Sentiment over the US economy remains strong, as Q2 is expected to be much stronger than Q1. Still, the British election results are good news for the pound, as the new majority government will have the political muscle to take steps to boost the UK economy. So, the overall sentiment is neutral on GBP/USD towards this release.
Technical levels, from top to bottom: 1.5746, 1.5625, 1.5552, 1.5459 and 1.5300.
5 Scenarios
- Within expectations: -0.2% to +0.4%: In such a case, the pound is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 0.5% to 0.9%: An unexpected higher reading can send GBP/USD above one resistance line.
- Well above expectations: Above 0.9%: Such an outcome would likely propel the pair upwards, and a second resistance line might be broken as a result.
- Below expectations: -0.7% to -0.3%: A weak reading could push GBP/USD below one level of support.
- Well below expectations: Below -0.7%: A sharp contraction by the indicator could push the pound lower and break a second support level.
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