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GBP/USD: Trading The British Retail Sales Apr 2014

British  Retail Sales is considered one of the most important indicators of consumer spending. The indicator’s release in the first week of each month provides analysts and traders with  an early  look at consumer spending. 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 Friday at 8:30 GMT.

 Indicator Background

Strong  retail sales  signify an increase in consumer spending, which is one of the most important components of the economy. An unexpected reading from the indictor can have a major impact on the GBP/USD.

Retail Sales bounced back in  February with a strong gain of 1.7%,  crushing the estimate of 0.5%. This followed a decline of 0.7% a month earlier. The markets are braced for a sharp downturn, with the estimate for the March release standing at -0.4%. Will the indicator repeat and beat the prediction?

Sentiments and levels

The pound  continues to trade at high levels,  as  employment  data continues to improve and speculation  about a rate hike continues. US employment numbers have also looked strong, although other sectors of the economy have posted mixed results. Another QE taper next week would mark a vote of confidence on the economy from the Federal Reserve and could give a  boost to the greenback.  So, the overall sentiment is  neutral on GBP/USD towards this release.

Technical levels, from top to bottom: 1.7180, 1.6990, 1.6823, 1.6705, 1.66 and 1.6475.

5 Scenarios

  1. Within expectations: -0.7% to -0.1%: In such a case, the  pound is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 0.0% to 0.4%: A reading at the zero level or in positive territory could send GBP/USD above one resistance line.
  3. Well above expectations: Above 0.4%: Such an outcome could propel the pair upwards, and a second resistance line might be broken as a result.
  4. Below expectations: -1.2% to -0.8%: A weak reading could push GBP/USD below one level of support.
  5. Well below expectations: Below -1.2%: In this scenario, the  pound could take a hit and  break  a second  support level.

For more about the pound, see the  GBP to USD forecast

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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.