Will Retail Sales and GDP Send the Pound Higher?

5

The Pound is trading in the highest levels for many months, near a major resistance line. There are 4 major indicators this week: CPI, MPC Meeting Minutes, Retail Sales and Revised GDP. Will they send the Pound to new highs?

GBP/USD trades above 1.50 during the most of May. It destroyed the magical number of 1.50 at the beginning of the month, thus breaking a major peak and resistance line that was set on February 9th.

GBP/USD May 2009

Last week, cable traded as high as 1.530, bouncing nicely at the next resistance line – 1.5370, that was the peak on January 8th.At the beginning of the new week, GBP/USD trades in a narrow range, below last week’s peak. At the time of writing, it’s at 1.5288.

The next hurdle for Pound is at 1.5720. GBP/USD was there at December 17th, a day before the huge tumbling down of the British Pound.

Major indicators this week in Britain

Since mid April, when I wrote about the Critical Week for the Pound, there weren’t so many important indicators in Britain.

  1. CPI is published on Tuesday. Britain doesn’t suffer from deflation nor inflation. Consumer Price Index is predicted to rise by 2.4% (annually adjusted). Expectations are for a weaker rise in prices. With low expectations, a hike in prices would boos the Pound. Higher prices mean that the 0.5% interest rate can’t hold for long and the BoE will have to act.
  2. MPC Meeting Minutes: In their last meeting, the distinguished members decided to expand treasury buying, thus enlarging the Quantitative Easing program. This move weakened the British Pound. Why did they make this decision? What are the next moves? There will be some answers on Wednesday, and this will shake the Pound.
  3. Retail Sales: British Retail Sales, published on Thursday, are expected to rise by 0.5%. Retail Sales are a major economic indicator. Expectations are positive, so exceeding them will be hard. Only a significant surprise will send the Pound higher. This could be a day of rest for GBP/USD.
  4. GDP: British Gross Domestic Product fell by 1.9% in the first quarter, at least according to the initial Prelim reading. This was disappointing when it was published. On Friday, the Revised GDP will be released. Naturally, this major indicator will shake the Pound. If the output is higher than expected, this could send the Pound to new highs.

GBP/USD is trading in long term uptrend. In order to make it to the next barrier, and break the resistance line, it needs the back wind of strong and important figures. This week provides many strong indicators.

Will they be strong enough to push the Pound to the next level?

Liked this story? Vote for it on ForexFactory.

Get the 5 most predictable currency pairs

About Author

Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.