GBP/USD: Trading the UK Retail Sales

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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 Friday at 8:30 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 rebounded sharply in March, with a gain of 1.4%. This easily beat the estimate of 0.4%. The markets are braced for a downturn in April, with a forecast of -0.3%. Will the indicator repeat and beat the estimate?

Sentiments and levels

The pound soared after PM Theresa May surprised and called a snap election. May is doing well in the polls and is seeking a larger majority ahead of the Brexit negotiations. The US dollar is under pressure following disappointing retail sales and CPI numbers in March, which missed the estimates. So, the overall sentiment is bullish on GBP/USD towards this release.

Technical levels, from top to bottom: 1.2860, 1.2775, 1.2548, 1.2345, 1.2213 and 1.2080.

5 Scenarios

  1. Within expectations: -0.8% 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: 0.2% to 0.6%: A gain in retail sales could send GBP/USD above one resistance line.
  3. Well above expectations: Above 0.6%. Such an outcome would likely push the pair upwards, and a second resistance line might be broken as a result.
  4. Below expectations: -1.3% to -0.9%: A weak reading could push GBP/USD below one level of support.
  5. Well below expectations: Below -1.3%: 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.

Get the 5 most predictable currency pairs

About Author

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.

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