British Retail Sales is considered a key economic indicator and provides analysts and traders with a snapshot of consumer spending in the UK. A reading that is higher than the market forecast is bullish for the British pound.
Retail Sales is an important indicator of consumer spending and confidence. Strong numbers in this sector are critical for economic growth.
The indicator looked sharp in June, as Retail Sales jumped 1.4%, exceeding market expectations. The forecast for July calls for a more modest increase of 0.6%. Will the indicator repeat and beat the market prediction?
Sentiments and levels
Although the pound did stage a rally late last week, the general trend of GBP/USD since early July has been downwards. The UK economy continues to sputter, and key sectors such as manufacturing, housing and construction have all been contracting. With dark clouds over Europe and the global outlook looking bleak, investors may continue to favor the safe haven provided by the dollar. So, the overall sentiment is bearish on GBP/USD towards this release.
Technical levels, from top to bottom: 1.5930, 1.5805, 1.5750, 1.5648, 1.56 and 1.5521.
Within expectations: 0.3% to 0.9%: In such a case, GBP/USD is likely to rise within range, with a small chance of breaking higher.
Above expectations: 1.0% to 1.3%: An unexpected higher reading can send GBP/USD well above one resistance line.
Well above expectations: Above 1.3%: Such an outcome would propel the pair upwards, and a second resistance line might be broken as a result.
Below expectations: -0.1% to 0.2%: A reading close to to the zero threshold could push GBP/USD below one level of support.
Well below expectations: Below -0.1%: In this scenario, the pound will likely lose ground and the pair could break a second support level.