GBP/USD Forecast: Sterling needs to withhold above 1.3380 to keep up with retail sales boost ahead of GDP report

The UK retail sales rose 1.6% m/m in April coming out well above market expectations while core retail sales stripping the comparison base of the auto motor fuel sales rose 1.3% m/m.
Sterling rose 100 pips above its cyclical low boosted by expectations of the upward revision to the first quarter GDP due this Friday.

Mario Blascak, PhD Independent Analyst

The GBP/USD is trading up 0.5% at around 1.3410 against the US Dollar after the UK retail sales for April came out strongly above expectations boosting hopes for upward revision of the first quarter GDP due on Friday.

The UK retail sales rose 1.6% m/m in April coming out well above market expectations of 0.7% m/m increase while core retail sales stripping the comparison base of the auto motor fuel sales rose 1.3% m/m compared to 0.4% m/m expected.

Total retail sales in the UK rose 1.4% over the year in April while core retail sales excluding auto motor fuel sales rose 1.5% y/y.

"Retail sales bounced back in April, as petrol and other sales recovered from the snowfall. But the underlying position remains subdued with the volume of goods sold over the last six months broadly unchanged,” Rob Kent-Smith, Head of National Accounts from the Office for National Statistics said in the report on Thursday.

Technically the GBP/USD needs to hold above 1.3380 representing 61.8% Fibonacci retracement line of the previous upmove from 1.2440 to 1.4377 22-month hight to confirm the corrective reversal. The Momentum and the Relative Strength Index analysis on 1-hour chart jumped up strongly and Slow Stochastics made a bearish crossover just below the territory indicating the overbought condition. Should GBP/USD close above 1.3380 and will be supported by better than expected fundamentals, the currency pair has potential to correct to 1.3460-1.3500, previous support zone. The bearish trend on GBP/USD prevails with disappointing fundamental headlines pushing the pair towards 1.3300.

Author

Mario Blascak, PhD

Independent Analyst

Dr. Mário Bla&scaron;čák worked in professional finance and banking for 15 years before moving to journalism. While working for Austrian and German banks, he specialized in covering markets and macroeconomics.

EUR/USD remains on the back foot around 1.1700

EUR/USD is coming under heavy selling pressure, hovering around the 1.1700 region in the latter part of the NA session on Monday. The pair’s severe retracement comes as the US Dollar stages a marked bounce on the back of the prevailing flight to safety atmosphere, as investors react to the escalating conflict in the Middle East.

GBP/USD hits new yearly lows near 1.3300

GBP/USD adds to the recent bearish tone, approaching to the key 1.3300 support to reach fresh YTD troughs against the backdrop of the robust performance of the US Dollar. Indeed, Cable’s decline comes amid the firm demand for the safe-haven space in the wake of the US and Israel attacks to Iran.

Gold eases some ground, approaches $5,300

Gold now surrenders part of the earlier advance, reshifting its attenton to the $5,300 zone per troy ounce at the beginning of the week. Indeed, the yellow metal’s firm performance appears propped up by incresing geopolitical jitters in the Middle East, which at the same time fuels the demand for the safe-haven space.