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British  Retail Sales is considered one of the most important indicator 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 Friday at 8:30 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. Given the importance that analysts attach to this economic indicator, an unexpected reading can affect the direction of GBP/USD.

The  March reading of -0.8% was a major disappointment, as the indicator posted its poorest performance in twelve months. The forecast for  April, however,  calls for a  respectable 0.4% rise. Will the indicator bounce back into positive territory?

Sentiments and levels

The pound has performed extremely well against the dollar in 2012, as the pair  slid as  low as 1.53 in January. The pound’s rise is all the more remarkable, given the much stronger US economy, compared to its UK counterpart. With the psychologically important 1.60 level under attack, traders are likely to jump on the bandwagon, and the GBP/USD could continue to push upwards.. So, the overall sentiment  is bullish  on GBP/USD towards this release.

Technical levels, from top to bottom: 1.6265, 1.6132, 1.6065, 1.60, 1.5923 and 1.5892.

5 Scenarios

  1. Within expectations: 0.1% to 0.7%: In such a case,  GBP/USD is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 0.8% to 1.1%: An unexpected higher reading can send the pair above one resistance line.
  3. Well above expectations: Above 1.1%: Such an outcome would propel the pair upwards, and a second resistance line might be broken as a result.
  4. Below expectations: -0.3% to 0.0%: A reading  in  negative territory  could push GBP/USD downwards,  breaking one level of support.
  5. Well below expectations: Below -0.3%: Another reading deep in negative territory could hurt the pound, and the pair could  break two or  more  support levels.

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