GBP/USD - Will UK retail sales beat estimates and boost Pound?
|Despite being overbought as per the 14-day RSI, GBP/USD found takers around the 5-DMA level of 1.3503 in Asia and rose to 1.3530 levels.
Ahead of the FOMC rate decision, the GBP/USD pair could take cues from the UK retail sales due at 08:30GMT.
Retail sales to beat estimates?
The official data due today is expected to show retail sales rose 0.2%m/m and 1.4% y/y in August. The core retail sales, which exclude fuel, are seen rising 0.2% m/m and 1.4% y/y.
The leading indicators released earlier this month showed the retail sales pick up pace in August. The British Retail Consortium [BRC] data released on September 4 showed like-for-like sales rose 1.3% in August, against a 0.9% fall for the same month in 2016. Online non-food sales rose 11% in August compared to 8.8% for the same month last year.
Thus, the Pound could remain bid in early Europe in anticipation of a better-than-expected retail sales figure. A strong data could see the US-UK 10-year yield spread narrow further in favor of the GBP. However, caution is still advised as GBP/USD is overbought as per the daily indicators.
On the other hand, a slight miss on the expectations may yield a relatively strong pull back given the overbought technical conditions.
GBP/USD Technical Levels
FXStreet Chief Analyst Valeria Bednarik writes, " Technically, the pair is at risk of extending its decline, as after moving back and forth, it settled around the 23.6% retracement of its latest bullish run, at 1.3505, but below a still bullish 20 SMA, according to the 4 hours chart. Technical indicators in the mentioned time frame have extended their declines, with the Momentum further accelerating below its mid-line, but the RSI currently at 55. Should the pair break below 1.3440, the 38.2% retracement of the mentioned rally, bulls will probably keep pulling back, resulting in another day of downward moves.
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