GBP/USD Forecast: can UK retail sales help to break through monthly trading range?

The key US Dollar Index treaded water near six-month lows as the latest political turmoil in the US appeared to intensify and could threaten the US President Donald Trump's promised pro-growth economic policies. On Wednesday, the greenback remained heavily offered across the board and tumbled to its lowest level since early November, erasing all of its gains recorded following the US Presidential elections, as the financial markets were rocked following a report that Trump tried to influence an FBI probe into the actions of former National Security Advisor Michael Flynn.

Meanwhile, rising political instability and a slew of disappointments from recent US economic data has also dampened expectations for more Fed rate-hike actions in 2017 and further intensified the bearish sentiment surrounding the buck. Today’s US economic docket features the release of initial weekly jobless claims data and Philly Fed Manufacturing Index for May, but seems unlikely to provide any immediate respite for the USD bulls. 

GBP/USD

The pair also benefitted from broad based US Dollar weakness, which helped mitigate mixed UK job numbers, and jumped back to multi-month highs, albeit once again failed to conquer the key 1.30 mark. Currently trading around 1.2965-70 region, traders now look forward to today's release of UK monthly retail sales data for some fresh bullish impetus to break through the psychologically important level.

Technically, the pair has been oscillating within a broader trading range over the past three-weeks, pointing to consolidation phase before the next leg of directional move. Hence, a decisive move beyond 1.2985-90 trading range resistance, leading to a subsequent move beyond the 1.30 handle, would confirm a fresh bullish break-out and accelerate the bullish move immediately towards 1.3075-80 resistance. Momentum above this resistance is likely to get extended further beyond the 1.3100 handle towards its next major hurdle near 1.3170 horizontal level. 

Alternatively, retracement from the current trading range resistance, and a subsequent drop below 1.2940-30 immediate support, would reaffirm near-term range-bound price-action and drag the pair back below the 1.2900 handle. Below the said handle, the pair might continue to drift lower and head towards testing the trading range support near 1.2850-40 region.