Sterling is stuck to the bottom as optimism gives out under disappointing data.
A further miss for Retail Sales today could send the Pound crumbling.
The GBP/USD is sitting on the floor for Thursday’s action after getting crumpled by disappointing inflation data on Wednesday, and the pair is moping about 1.4200.
The pair has fallen off of the week’s highs, and as FXStreet’s Omkar Godbole noted in the GBP/USD preview: “The GBP/USD pair risks bearish reversal if the UK retail sales figure, due at 08:30 GMT, disappoints market expectations.” Omkar continued, “the currency pair began the week on a positive note, rising to a fresh post-Brexit referendum high of 1.4377 on Tuesday. However, GBP longs lightened up in the last 48 hours, courtesy of the dismal UK wages price inflation and consumer price index release”, and he finished by stating that, “clearly, the bull grip has weakened and the tide could turn in favor of the GBP bears if the UK March retail sales fall more than the expected drop to 0.5 percent month-on-month.”
GBP/USD: On the back foot ahead of the UK retail sales release
According to Jim Langlands, “GbpUsd initially traded up to 1.4314 on Wednesday ahead of the CPI figure, which missed expectations, sending Cable sharply lower on the back of the recent underperforming data, in both wages on Tues and CPI today, which has caused a rethink of BoE hike resolve. The UK Retail Sales are due today and a soft number could put another dent in the prospect of a BOE May hike, (exp 0.2%mm, 1.1%yy; Ex-Fuel -1.7%mm, +2.0%yy).”
“We could now be in for a retest of the 1.4173 session lows, below which would allow a run towards 1.4120 and possibly to 1.4050 although that remains some way off. On the topside, sellers will arrive today at 1.4215 and then again at 1.4275 ahead of 1.4300. Further out, if we do take out 1.4315 we could then revisit 1.4375 above which we are left looking at a test of 1.44/1.45”
“Take a nimble stance today, but technically is does appear that further downside pressure may come about.”
GBPUSD: Sellers will arrive today at 1.4215
GBP/USD Levels to watch
According to Valeria Bednarik, FXStreet’s Chief Analyst, “Dollar’s broad weakness helped the pair to bounce after the US opening, but the recovery stalled at 1.4245, with the pair now struggling to sustain gains above the 1.4200 figure. The pair has fallen to the pip down to the 50% retracement of its latest bullish run, and now hovers around the 38.2% retracement of the same rally, unable to settle above it, somehow anticipating further declines ahead. Technical readings in the 4 hours chart also favor a bearish extension, as the pair is now developing well below its 20 SMA, while technical indicators resumed their declines within negative territory, with strong downward slopes.”