GBP/USD Forecast: Sterling set to test 50-DMA at 1.2820 as correction lower is losing steam
|- The GBP/USD is trading little changed below 1.2800 line after the UK Prime Minister suffered another defeat from her own Conservative party hardliners in House of Commons.
- The UK retail sales rose above expectations by 1.0% over the month in January after December saw retail sales fall sharply marking worst Christmas sales in a decade.
- The UK Secretary of State Andrea Leadsom said the EU knows what the UK wants on the Irish border backstop issue.
- The technical indicators favor correction on Sterling higher as Slow Stochastics is about to make the bullish crossover in the oversold territory.
The GBP/USD is trading little changed just above 1.2800 level on Friday as the UK retail sales surprised on the upside while the UK Prime Minister suffered another defeat in the House of Commons late on Thursday. The UK House of Commons voted by 303 to 258 against a symbolic motion resolving the Brexit deadlock. Voting in House of Commons reflected a revolt from the ultra-conservative Eurosceptic members of parliament in her Conservative party that voted against the move.
Although there are no many headlines regarding Brexit recently, the UK government is supposedly working on amendments to Brexit deal to be able to win the support of stubbornly reluctant parliament.
The UK Secretary of State Andrea Leadsom said that the EU knows what the UK wants on the Irish border backstop issue and the government is determined to keep a no-deal Brexit possibility o the table.
The UK retail sales rose unexpectedly strongly by 1.0% over the month in January after falling sharply in December, marking the worst Christmas sales in a decade. The core UK retail sales rose 1.2% m/m in January
Technically the GBP/USD is moving within a corrective trend after breaking the psychologically important 1.3000 and 38.2% Fibonacci retracement line of 1.2970 last week.
The technical oscillators like the Relative Strength Index (RSI) is flat in the neutral territory while Momentum is trending lower and Slow Stochastics (SS) fell into the Oversold territory. The GBP/USD is sitting at around the 1.2800 level and with the UK retail sales coming out stronger than expected it is likely to re-gain 1.2822 representing a 50-DMA on a daily chart. The 1.2883 representing a 100-DMA is resistance on the upside.
GBP/USD daily chart
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