Home GBP/USD: Trading the UK Retail Sales

GBP/USD: Trading the UK Retail Sales

UK  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 9:30 GMT.

 Indicator Background

Retail  Sales  is  the primary gauge  of consumer spending, a critical component of economic growth.  An unexpected reading can have a sharp impact on the movement of GBP/USD.

Retail Sales  bounced back in style in January,  climbing 2.3% in January.  This crushed the estimate of 0.8%. The markets are braced for a decline in the February report, with an estimate of -0.7%.

Sentiments and levels

We are seeing some profit-taking this week, as the  pound has posted sharp losses this week following three straight weekly gains. US fundamentals remain stronger than the UK, and although the Fed did not make a move in March, the bias remains towards tightening. This monetary divergence favors the US dollar. So, the overall sentiment is  bearish on GBP/USD towards this release.

Technical levels, from top to bottom: 1.4562, 1.4346, 1.4227, 1.4148 and 1.40.

5 Scenarios

  1. Within expectations:-1.0% to -0.4%: In such a case, the  pound is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: -0.3% to 0.1%: An unexpected higher reading can send GBP/USD above one resistance line.
  3. Well above expectations: Above 0.1%. Such an outcome would likely push the pair upwards, and a second resistance line might be broken as a result.
  4. Below expectations: -1.1% to -1.5%: A  weak reading could push GBP/USD below one level of support.
  5. Well below expectations: Below -1.5%:  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.