GBP/USD – Little Movement As UK Retail Sales Slide

GBP/USD trades just over the 1.68 line on Friday, continuing the lack of movement which has marked the pair for most of the week. In Friday events, British Retail Sales slipped in March, but did manage to beat expectations. In the US, Friday’s highlight is UoM Consumer Sentiment.

British Retail Sales, the primary gauge of consumer spending, posted a paltry gain of 0.1%, well off the previous reading of 1.7%. The good news was that the indicator beat the estimate of -0.4%, so the markets didn’t react negatively to the news. Still, the weak reading points to slower growth in the economy. British BBA Mortgage Approvals also pointed to a decline in consumer spending. The housing indicator dipped to 45.9 thousand, a three-month low. This was well below the estimate of 48.9 thousand. Consumer spending is one of the engines of economic growth, so a decrease could spell trouble for the high-flying British pound.

There is no arguing that the British economy has enjoyed a strong recovery, but that does not mean that policymakers at the BOE see eye-to-eye on the health of the economy or inflation. The minutes of the previous policy meeting indicated that Monetary Policy Committee members were “uncertain” about the amount of spare capacity in the economy and the medium-term inflation outlook. Importantly, the MPC voted unanimously to maintain the benchmark interest rate at 0.50%. With the unemployment rate down to 6.9%, there is growing speculation that we could see a rate hike as early as next spring, although the BOE has done its best to dampen expectations of a rate increase.

On Thursday, key US releases pointed in both directions. Unemployment Claims jumped to 329 thousand, its highest level since mid-February. This was much higher than the estimate of 309 thousand. There was much better news from the manufacturing front, as Core Durable Goods Orders jumped 2.0% in March, crushing the estimate of 0.6%. This was the key indicator’s best showing since September 2o12. Durable Goods Orders kept up the fast pace with a sharp gain of 2.6%, beating the estimate of 2.1%.

 

GBP/USD for Friday, April 25, 2014

Forex Rate Graph 21/1/13

GBP/USD April 25 at 12:20 GMT

GBP/USD 1.6813 H: 1.6831 L: 1.6790

 

GBP/USD Technical

S3 S2 S1 R1 R2 R3
1.6549 1.6705 1.6765 1.6896 1.7000 1.7210

 

  • GBP/USD continues to trade close to the 1.68 line on Friday.
  • 1.6765 is providing support. 1.6705 is stronger.
  • 1.6896 is a strong resistance line, protecting the key 1.70 level.

Further levels in both directions:

  • Below: 1.6765, 1.6705, 1.6549 and 1.6416
  • Above: 1.6896, 1.70, 1.7210 and 1.7374.

 

OANDA’s Open Positions Ratio

GBP/USD ratio is almost unchanged on Friday trading. This is consistent with the movement of the pair, as the pound is showing little movement. A large majority of the open positions in the GBP/USD ratio are short, indicative of a trader bias towards the dollar breaking out and posting gains.

The pound continues to trade close to the 1.68 line, as the pound remains at high levels. GBP/USD is steady in the European session.

 

GBP/USD Fundamentals

  • 8:30 British Retail Sales. Estimate -0.4%. Actual +0.1%.
  • 10:00 British BBA Mortgage Approvals. Estimate 48.9K. Actual 45.9K.
  • 13:45 US Flash Services PMI. Exp. 56.2 points.
  • 13:55 US Revised UoM Consumer Sentiment. Estimate 83.2 points.
  • 13:55 US Revised UoM Inflation Expectations.

 

*Key releases are highlighted in bold

*All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.