The Retail Sales release is considered one of the most important economic indicators. A reading that is higher than the market forecast is bullish for the British pound.
Update: UK retail sales disappoint – GBP/USD already low
Here are all the details, and 5 possible outcomes for GBP/USD.
Published on Friday at 9:30 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.
The indicator softened in December to 0.4%, but this was well above the forecast of -0.6%. The downward trend is expected to continue, with the markets braced for a decline of 0.1%.
Sentiments and levels
British CPI continues to slide, easing pressure on the BOE to raise rates. This divergence with the Fed, together with strong US economic growth, will likely continue to weigh on the pound. So, the overall sentiment is bearish on GBP/USD towards this release.
Technical levels, from top to bottom: 1.5625, 1.5539, 1.5416, 1.5290 and 1.5114.
5 Scenarios
- Within expectations: -0.4% to -0.1%: In such a case, the pound is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 0.0% to 0.4%: An unexpected higher reading can send GBP/USD above one resistance line.
- Well above expectations: Above 0.4%: Such an outcome would likely propel the pair upwards, and a second resistance line might be broken as a result.
- Below expectations: -0.9% to -0.5%: A weak reading could push GBP/USD below one level of support.
- Well below expectations: Below -0.9%: A sharp contraction by the indicator could push the pound lower and break a second support level.
For more about the pound, see the GBP to USD forecast.
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