GBP/USD – Retail Sales Plunge But Pound Unscathed

The British pound has steadied in the Thursday session, after considerable losses on Wednesday. In North American trade, GBP/USD is trading at 1.4205, down 0.01% on the day. On the release front, British Retail Sales plunged 1.2%, worse than the estimate of -0.5%. US unemployment claims ticked lower to 232 thousand, close to the estimate of 230 thousand. As well, the Philly Fed Manufacturing Index improved to 23.2 thousand, easily beating the estimate of 20.8 points.

British consumer data has been soft this week, and this will likely raise concerns about the health of the British economy. On Thursday, Retail Sales declined 1.2%, its weakest reading in three months. However, the sharp drop has been attributed to unusually bad weather in March, as blizzards hampered travel in the UK and kept consumers at home and away from shopping malls. The markets shrugged off the weak release, and the pound is unchanged on Thursday.

The pound lost ground on Wednesday, following the release of weak inflation numbers. CPI in March dropped to 2.5%, after six consecutive readings of around 3.0 percent. The soft reading surprised the markets, and the pound responded with losses. The real producer index and other inflation indicators also missed their estimates. Despite the slowdown in inflation and consumer spending, the markets still expect the Bank of England to raise rates at next month’s policy meeting. Policymakers in favor of a rate hike can point to the fact that inflation still remains well above the BoE target of 2 percent and the labor market remains tight. The pound has jumped more than 5% against the greenback this year, and if the BoE raises rates next month, the pound will likely make further gains.

GBP/USD Fundamentals

 Thursday (April 19)

  • 4:30 British Retail Sales. Estimate -0.5%. Actual -1.2%
  • 8:00 US FOMC Member Lael Brainard Speaks
  • 8:30 US Philly Fed Manufacturing Index. Estimate 20.8. Actual 23.2
  • 8:30 US Unemployment Claims. Estimate 230K. Actual 232K
  • 9:30 US FOMC Member Randal Quarles Speaks
  • 10:00 US CB Leading Index. Estimate 0.3%. Actual 0.3%
  • 10:30 US Natural Gas Storage. Estimate -23B. Actual -36B
  • 18:45 US FOMC Member Loretta Mester Speaks

*All release times are DST

*Key events are in bold

GBP/USD for Thursday, April 19, 2018

GBP/USD April 19 at 11:35 DST

Open: 1.4203 High: 1.4246 Low: 1.4160 Close: 1.4192

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.3901 1.4010 1.4128 1.4227 1.4345 1.4452

GBP/USD ticked lower in the Asian session. The pair gained ground in European trade but has given up these gains in North American session

  • 1.4128 is providing support
  • 1.4227 is the next resistance line. It was tested earlier on Thursday
  • Current range: 1.4128 to 1.4227

Further levels in both directions:

  • Below: 1.4128, 1.4010, 1.3901
  • Above: 1.4227, 1.4345, 1.4452 and 1.4565

OANDA’s Open Positions Ratio

GBP/USD ratio continues to show little movement this week. Currently, short positions have a majority (60%), indicative of trader bias towards GBP/USD continuing to move lower.

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.