- Technicals back the bullish trend.
- Benefits from broad USD weakness.
- Eyes on UK retail sales and US consumer sentiment.
The GBP/USD pair extends its overnight side trend into Asia, as the bulls consolidate more-than 1 big figure recovery witnessed a day before, awaiting fresh impetus from the upcoming UK retail sales release due at 0930 GMT.
GBP/USD headed to 1.4000
Thursday’s rebound in Cable was mainly driven by the renewed sell-off seen in the US dollar versus its main competitors, despite the rise in Treasury yields, which is on the back of rising March Fed rate hike bets and expectations of an uptick in the US CPI amid a rally in oil prices.
Moreover, optimistic comments made by the UK PM May on the Brexit issue, following her meeting with the French President Macron, also helped the pound stage a solid comeback. Theresa May noted that Brexit will never impact the bilateral French-UK relationship.
However, it remains to be seen if the spot can extend the recovery mode, as markets are expecting the UK retail sales to drop sharply in December while the US dollar could revert to the green zone, in reaction to the reports that the US House passed the stopgap government funding bill.
Later on Friday, “The UK is set to release December Retail Sales this Friday, expected down 0.6% monthly basis, while the annual figure is seen coming in at 3.0% from the previous 1.6%,” according to Chief Analyst, Valeria Bednarik.
Also, of relevance remains the US prelim UoM consumer sentiment data and Fedspeaks due on the cards in the NA session.
GBP/USD Technical Levels
Bednarik added: “The pair maintains its positive stance according to technical readings in the 4 hours chart, as it stands firmly above a bullish 20 SMA, while the Momentum indicator extends its advance within positive territory, and the RSI indicator consolidates around 67. The pair still has room to extend its gains up to the critical 1.4000 figure, particularly if Friday UK’s data beat expectations. Support levels: 1.3840 1.3800 1.3770. Resistance levels: 1.3900 1.3945 1.3990.”