GBP/USD trying to hang on to 1.27 ahead of UK retail sales

Sterling marks in a new 2018 low at 1.2660 and recovery has been half-hearted at best.
Thursday brings Retail Sales figures after yesterday's inflation reading failed to inspire.

Joshua Gibson FXStreet

The GBP/USD is trading near the 1.2700 level ahead of Thursday's London market session as fears of a no-deal Brexit continue to rise and inflation figures for the UK barely make it to expectations.

The UK's CPI reading yesterday came in at 2.5%, struggling to meet market expectations, while wages only rose at an annualized rate of 2.4% for the quarter into June, which makes the Bank of England's (BoE) case for rate hikes a difficult one to make, even though the UK's central bank pace of rate hikes, currently expected to be around one rate lift per year for several years, is far below what most market participants had been hoping for only a few months ago.

Next up for the GBP will be Thursday's Retail Sales figures, dropping at 08:30 GMT. Sterling traders are hoping that the m/m Retail Sales figures for July manage to climb by just 0.2% compared to the previous month's -0.5% decline, while the y/y figure for July are expected to tick up from 2.9% to 3.0%.

GBP/USD levels to watch

The GBP/USD pairing continues to struggle to find a bullish foothold despite being buried deep into bearish territory with little to no pullback, and according to FXStreet's own Valeria Bednarik: "technically, the pair is down for a second consecutive day, and still bearish according to technical readings in the 4 hours chart, as the pair keeps developing below a firmly bearish 20 SMA, while technical indicators continue to move back and forth within negative levels, lacking directional strength at the time being."

Support levels: 1.2665 1.2620 1.2575

Resistance levels: 1.2735 1.2760 1.2795

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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