GBP/USD: rising channel meeting heavy resistance
|- GBP/USD bulls capped despite dollar weakness.
- UK data disappointments a cause for alarm?
GBP/USD has been oscillating between a high of 1.3223 and a low of 1.3197 in Asia at the start of the week after closing the week with gains on Friday due to broad-based dollar weakness.
UK PM to get support on Brexit divorce bill - FT
Data in the UK has, otherwise, been a preventative factor in sterling's upside price action where resistance has formed at the aforementioned highs. The pound is under scrutiny already in respect to the Brexit concerns and negotiations at a deadlock, (although the weekend news is somewhat encouraging where there are reports that May will find backing from ministers in raising the "divorce bill" settlement offer to something more appealing tot he EU).
UK data hinders bull channel rise
However, that retail sales and employment numbers were an eyesore for the bulls and put a spanner in the works of November's recovery channel. The employment data showed the biggest drop in over two years, while retail sales fell on a yearly basis for the first time since 2013. However, analysts at Brown Brothers Harriman explained and argued that the 0.4% decline in the headline was nearly half of the 0.7% decline the consensus expected. "It is a small payback for the 2.3% gain in January. ONS said consumers postponed clothing and footwear purchases due to weather. Retail sales are up 3.8% year-over. The retail deflator, which includes petrol stations, fell 2.5% year-over-year. Retails have cut prices for 20 months. Sterling has slipped to session lows, a little below $1.4060 before the report. If nothing else, the downside momentum eased." Meanwhile, for the week ahead, a final version of UK Q3 GDP will be released this week.
GBP/USD levels
Valeria Bednarik, chief analyst at FXStreet explained that the daily chart shows that the pair is at the upper end of these last weeks' range, but still technically neutral according to the daily chart, as the price established above a flat 20 DMA, while technical indicators remain around their mid-lines, with limited upward strength. "In the 4 hours chart, the pair is biased higher, with the 20 SMA crossing above the 200 EMA below the current level, as technical indicators bounced after nearing their mid-lines, with a modest bullish slope ahead of the weekly opening. The price is near the 1.3220/30 region, an immediate short-term resistance, but a stronger one is located at 1.3259, the high set last week."
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