GBP/USD: On the defensive despite strong UK retail sales

GBP/USD fell below 1.30 yesterday despite the big beat on the UK retail sales.
US retail sales also bettered estimates, sending the dollar higher against most majors.
Sterling could be headed lower to 1.29, having created another bearish lower high last week.

Omkar Godbole FXStreet Contributor

The path of least resistance for the GBP/USD appears to be on the downside.

The British Pound slipped below 1.30 and closed under the April 5 low of 1.2987 yesterday, validating the bearish lower high of 1.3133 created last Friday. Notably, that is the third bearish lower in the last four weeks.

The bearish move happened despite the upbeat UK data - consumer spending, as represented by retail sales, rose 1.1 percent in March, smashing expectations of a negative print.

While Sterling failed to pick up a strong bid, the greenback found takers on the back of upbeat US retail sales report. Consumer spending rose 1.6% in March, the strongest pace of growth since September 2017, beating the consensus forecast was for a 1% rise. The previous month's print was also revised higher.

As a result, cable suffered a bearish close below 1.2987. Sterling's inability to cheer strong UK data, coupled with the bearish close below 1.30 indicates scope for a deeper drop to 1.29 - the lower edge of the falling wedge pattern seen on the daily chart. The drop will likely happen in the first half of the next week and the will likely trade comatose today as major FX trading hubs are closed on account of Good Friday holiday.

The outlook would turn bullish if the falling wedge is breached to the higher side. As of writing, the pair is trading at1.2990, representing marginal gains on the day, while the falling wedge resistance is seen at 1.3080.

Technical Levels

GBP/USD

Overview
Today last price	1.2990
Today Daily Change	0.0013
Today Daily Change %	0.10
Today daily open	1.2978

Trends
Daily SMA20	1.3095
Daily SMA50	1.3099
Daily SMA100	1.2954
Daily SMA200	1.2968

Levels
Previous Daily High	1.3055
Previous Daily Low	1.2978
Previous Weekly High	1.3133
Previous Weekly Low	1.303
Previous Monthly High	1.3384
Previous Monthly Low	1.296
Daily Fibonacci 38.2%	1.3007
Daily Fibonacci 61.8%	1.3026
Daily Pivot Point S1	1.2952
Daily Pivot Point S2	1.2927
Daily Pivot Point S3	1.2875
Daily Pivot Point R1	1.3029
Daily Pivot Point R2	1.3081
Daily Pivot Point R3	1.3106

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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