GBP/USD Forecast: Falling towards critical support as data doesn't help
|- GBP/USD struggles close to 1.3000 despite upbeat retail sales.
- The market mood and US retail sales are set to dominate trading.
- The technical picture is worsening for the pair, but uptrend support can help.
GBP/USD is trading just above 1.3000, lower on the day. The thrill in markets is gone and the downbeat mood boosts the safe-haven US Dollar. China and the US reported "new progress" on trade talks, but these reports have circulated before.
The upbeat UK retail sales report sent GBP/USD temporarily higher. Sales rose by 1.1% in March, beating expectations for a drop. In addition, it came on top of upwards revisions. Excluding fuel, an increase of 1.2% was seen, also far above early forecasts.
Retail sales complete a series of three top-tier figures that began with the OK jobs report, continued with the mediocre inflation data and concludes now. All in all, the data is mixed and does not provide a clear direction, leaving the few Brexit headlines and the market mood to shape trading. Without any progress in Conservative-Labour talks, the pound is probably limited.
Later today, the US releases its own retail sales report. Moderate increases are on the cards.
See US Retail Sales Preview: Let the spending begin
GBP/USD Technical Analysis
After the downtrend resistance line rejected any upside move, GBP/USD is now closer to the uptrend support line that also dates back to early March. The line meets the round 1.3000 level at the time of writing, making it a critical support line.
Momentum on the four-hour chart remains to the downside and the Relative Strength Index is nearing 30, but still holds above oversold conditions.
Support below 1.3000 is at 1.2985 which is the low point in April so far. The March trough of 1.2960 is next, followed by 1.2895 and 1.2830.
Resistance is at 1.3035 that was a support line in mid-April. 1.3070 was a swing high earlier this week. 1.3120 was the high point in recent weeks and far above, 1.3270 is the April high.
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