GBP/USD eyes UK retail sales, will it end the week on a positive note?
|UK data due today is expected to show retail sales volumes only edged up 0.9% month-on-month in January, causing the year-on-year increase to moderate to 3.4%% from 4.3% in December and 5.7% in November.
GBP/USD fell to a low of 1.2383 earlier this week on the back of a weaker-than-expected UK CPI release and dismal UK wage growth release. However, the US dollar failed to capitalize on the strong domestic data and hawkish Yellen, thus allowing a recovery in the GBP/USD pair. The spot clocked a high of 1.2524 on Thursday before falling to 1.25 levels. As of now, the spot is trading largely unchanged on the week.
Weekly gain likely on strong retail sales print
The American dollar is on the back foot, while the US data calendar is light, thus, doors are open for a rally in the GBP/USD, especially if the UK retail sales figure beats estimates.
However, the lead indicator - The British Retail Consortium (BRC) figure released earlier this month had shown a 0.6% y/y drop in the like-for-like retail sales in January. The figure was well below the forecast of 0.9% increase.
Thus, a weaker-than-expected retail sales release cannot be ruled out. Moreover, that could keep the GBP/USD pair flat to negative ahead of the weekend.
GBP/USD Technical Levels
At the time of writing, the spot was trading just above 1.25 handle. A break above 1.2548 (Feb 14 high) would open doors for 1.2582 (Feb 9 high). A daily close above the same could see a bullish move gather pace and the spot could test 1.2706 (Feb 2 high).
On the other hand, a breakdown of support at 1.2479 (session low) would shift risk in favor of a drop to 1.2451 (previous session’s low). A violation there could yield a sell-off to 1.2383 (Wednesday’s low).
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