GBP/USD trying to grind its way back to 1.34 ahead of UK and US Retail Sales double-header

Sterling remains optimistically bullish, though declining highs are capping upside action.
UK and US Retail Sales for Thursday could see plenty of action.

Joshua Gibson FXStreet

The GBP/USD is trading just shy of the 1.3400 major handle ahead of Thursday's London market session.

The latest Brexit vote in the House of Lords tipped towards a tougher Brexit scenario after Prime Minister Theresa May managed to win the vote at the last minute, eliminating some of the British parliament's ability to step into Brexit negotiations if a preliminary vote in August fails. Inflation figures also came out slightly worse than expected, with the y/y Core CPI figures coming in at 2.4%, just skirting below market expectations.

Despite this, the Sterling managed to recover its trading stance, and bounced back even after a rate hike from the US Fed saw the US interest rate lift by 25 bps. The GBP is still lifting in early Asia trading for Thursday, and the GBP/USD is on a somewhat positive note heading into today's Retail Sales figures, though Wednesday's action did punch in a new recent low.

At 08:30 GMT Year-on-year Retail Sales for May are expected to come in at 2.4%, a fair tick higher than the previous reading of 1.4%, while m/m Retail Sales for May (excluding fuel) are expected to come in at 0.3%, lower than the last print of 1.3%.

Following that will be US Retail Sales, slated for 12:30 GMT. Retail Sales excluding autos for the month of May is expected to come in at 0.5%, a minor uptick from the last reading of 0.3%. Economic data for the US has been pumping out nicely as of late, though a downturn in reported figures would be terribly timed, with the Fed having just raised interest rates.

GBP/USD Levels to watch

Bearish action has been the overall theme of the GBP/USD charts despite repeated bouncebacks from recent lows, and as FXStreet Chief Analyst Valeria Bednarik noted, "the 4 hours chart for the pair favors additional declines ahead as, despite multiple attempts, it was unable to advance beyond a bearish 20 SMA, while technical indicators accelerate their slides below their mid-lines. A break below the daily low should lead to a continued advance towards 1.3265, while further weakness exposing the 1.3220 region."

Support levels: 1.3310 1.3265 1.3220

Resistance levels: 1.3345 1.3390 1.3420

Author

Joshua Gibson

FXStreet

Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.

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