GBP/USD analysis: bounce back above 1.3000 doesn’t change the bearish stance

Valeria Bednarik FXStreet

GBP/USD Current price: 1.3036

UK Retail Sales disappointed big in June, further denting chances of an August hike.
Market players rushed to dump the greenback after Trump criticizes Fed's decision.

Worst-than-expected UK retail sales sent the GBP/USD pair to a fresh 2018 low of 1.2957, with the pair bouncing in the last session, to settle at around 1.3030, compliments to US President Trump criticism to Fed's policy. The soft-reading coupled with Wednesday's inflation to dent chances of an August hike. June Retail Sales, excluding volatile fuel prices, fell in the month by 0.6%, and increased 3.0% from a year earlier, missing expectations of 0.3% and 3.7% respectively. However, the report included more than what meets the eye: sales in Q2 were 2.1% higher than in the first three months of the year, the largest quarterly increase since Q1 2004, and the strongest reading since Q1 2015. Overall, the news was not that bad as the headline indicate, and upcoming positive figures may convince traders that the economic situation is not that bad. Nevertheless, a rate hike seems less likely now. The bounce, triggered by dollar's weakness, fell short of reversing the sour tone of Pound, also hurt by political jitters surrounding Brexit. Technical readings in the 4 hours chart show that the ongoing correction doesn't affect the dominant bearish trend, as the 20 SMA heads south almost vertically some 80 pips above the current level, while technical indicators have bounced from oversold readings, but remain well into the red.

Support levels: 1.3000 1.2970 1.2935

Resistance levels: 1.3080 1.3120 1.3155

View Live Chart for the GBP/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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