GBP/USD: UK retail sales, BOE could challenge post-FOMC pullback

  • Even if dovish Fed results in the pullback, the headline retail sales and the BOE meeting will bear market focus prior to less important data from the US.
  • 1.3055/45 continues to become strong near-term support for sellers to watch.

The British Pound (GBP) is mildly bid around 1.3215 versus the US Dollar (USD) ahead of London open on Thursday. The GBP/USD pair recently recovered as traders gave more importance to the dovish FOMC outcome than the Brexit drama. However, upcoming UK retail sales, BOE meeting and second-tier data from the US can challenge the pullback.

On Wednesday, the Federal Open Market Committee (FOMC) disappointed the greenback lovers by as the Fed signaled no rate-hikes during 2019 and only one such lift for 2020 in their latest projections. The US central bank previously forecasted two increase in the benchmark Fed rate during the present year. Not only rate-hike bias but the Fed’s intention to stop adjusting balance sheet by year-end and cutting growth forecasts for the year 2019 and 2020 also weighed on the USD.

During early Thursday, global investors continued emphasizing on the greenback weakness while looking at GBP/USD amid mixed headlines from the Brexit front. The recent report suggests that the EU is expecting the British House of Commons’ support for even a three month Brexit extension request submitted by the UK PM Theresa May.

The February month retail sales from the UK and monetary policy meeting by the Bank of England (BOE), followed by the US initial jobless claims and Philadelphia Fed manufacturing survey, could gain traders’ attention for further direction.

The UK retail sales, core to the British GDP, is likely to register a contraction of -0.4% versus +1.1% if following MoM forecasts. On a yearly basis, retail sales growth may soften to 3.3% from 4.2%.

After the 09:30 GMT release of retail sales, BOE could gain market focus before 12:00 GMT monetary policy meeting and the minutes’ release. The British central bank is likely not to change the present interest rate of 0.75% and the quantitative easing (QE) fund of £435 billion. However, minutes report will gain more attention in order to seek signals for the central bank’s expectations of future monetary policy considering Brexit developments. Recent data from the UK are likely in favor of a rate hike.

On the US front, initial jobless claims for the week ended on March 15 may decline to 225K from 229K while the manufacturing survey from Philadelphia Fed could mark +4.5 figure versus -4.1 figure.

GBP/USD Technical Analysis

In spite of taking a U-turn from 1.3150, the GBP/USD pair can’t be termed strong as 1.3310, 1.3350 and 1.3385 can continue limiting near-term upside, a break of which can please bulls with 1.3410 and 1.3450 resistances.

Meanwhile, 1.3150 and 1.3110 seem immediate supports ahead of highlighting 1.3055-45 support-confluence including 50-day simple moving average (SMA) and twelve-week old ascending support-line.

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