GBP/USD dips, retail sales loom

GBP/USD has recorded losses on Thursday, after posting four successive sessions in positive territory. Currently, the pair is trading at 1.3224, down 0.29% on the day.

British retail sales next

The week wraps up with UK retail sales, the primary gauge of consumer spending. Investors are bracing for a soft release for October, with an estimate of -0.3%. Retail sales have been in positive territory since April, when the indicator plunged 18.1%, when the Covid-19 pandemic first spread in the UK. If the upcoming release shows contraction, investors could give the British pound a thumbs-down.

Brexit talks postponed

Negotiations on Britain’s departure from the EU were unexpectedly disrupted on Thursday, as the EU announced that one of its negotiators had contracted Covid-19. The talks were already on a tight deadline, as the UK will leave the EU’s single market and customs union on December 31st. It remains unclear if an agreement has even been reached, but the financial markets have priced in a zero chance of a non-deal Bexit. This means that if no deal were to be reached, we could expect the pound to fall sharply.

The suspension of face-to-face talks between the EU and the UK due to Covid is the latest setback in what has been an agonizing process of the UK unwinding from the EU, which has gone on since the Brexit referendum in June 2016. With less than six weeks until the UK bids adieu to the European Union, it’s a safe bet that there were will be further twists and turns before the clock mercifully strikes midnight on December 31st.

GBP/USD Technical

  • GBP/USD broke below support at 1.3239 in the Eur0pean session. Below, there are support levels at 1.3208 and 1.3171
  • There is resistance at 1.3307, followed by resistance is 1.3344
  • GBP/USD continues to flirt with the 10-day MA line

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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.