GBP/USD: Trading the British Retail Sales Mar 2012

British Retail Sales is considered one of the most important consumer indicators. It provides analysts and traders with  a snapshot  of consumer spending. A reading that is higher than the market forecast is bearish for the US dollar.

Here are all the details, and 5 possible outcomes for GBP/USD.

Published on Thursday at 9:30 GMT.

 Indicator Background

Consumer spending is one of the most important components of the economy, and strong numbers in this sector signify growth and a stronger economy.

The indicator  rose in February by 0.9%, its best level since February 2011.  The market forecast for March predicts a sharp drop of 0.5%. Will the indicator prove the market wrong and again post strong numbers this month?

Sentiments and levels

GBP/USD has been choppy recently, with the exception of a sudden surge by the pound at the end of last week.  With the mixed economic figures coming out of the UK, we may continue to see the pair make moves in both directions, with no clear sign of a trend. So, the overall sentiment is  neutral on GBP/USD towards this release.

Technical levels, from top to bottom: 1.6132, 1.6065, 1.5987, 1.59, 1.5750   and 1.5639.

5 Scenarios

1. Within expectations: -0.8% to -0.2%: In such a case,  GBP/USD is likely to rise within range, with a small chance of breaking higher.
2. Above expectations: -0.1% to 0.2%: An unexpected higher reading can send GBP/USD above one resistance line.
3. Well above expectations: Above 0.2%: Such an outcome would propel the pair upwards, and a second resistance line might be broken as a result.
4. Below expectations: -1.2% to -0.9%: A sharp negative reading could push GBP/USD below one level of support.
5. Well below expectations: Below -1.2%: In this scenario, the  pair will fall and could break a second support level.

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