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GBP/USD: Trading the British Retail Sales Oct 2015

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  edged higher in August, posting a gain  of 0.2%, which matched the forecast.  The upward trend is expected to continue, with the markets expecting a gain of 0.3% in September.

Sentiments and levels

The US  may be  moving away from a rate hike in 2015, and this could boost rival currencies such as the pound. Still the US economy is stronger than that of the UK, and  weak global conditions  may lead to more investors seeking safety with the US dollar and dumping the British pound.  So, the overall sentiment is  neutral on GBP/USD towards this release.

Technical levels, from top to bottom: 1.5682, 1.5590, 1.5485, 1.5341, 1.5269  and 1.5163.

5 Scenarios

  1. Within expectations: 0.0% to 0.6%: In such a case, the  pound is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 0.6% to 1.0%: An unexpected higher reading can send GBP/USD above one resistance line.
  3. Well above expectations: Above 1.0%: Such an outcome would likely propel the pair upwards, and a second resistance line might be broken as a result.
  4. Below expectations: -0.5% to -0.1%: A reading in negative territory could push GBP/USD below one level of support.
  5. Well below expectations: Below -0.5%:  A sharp contraction  by the indicator  could push the pound lower and  break  a second  support level.

For more on the pound, see the GBP/USD forecast.

Kenny Fisher

Kenny Fisher

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.