GBP/USD Daily Forecast – Strong GBP Retail Sales Data Helping RecoveryBrexit tensions continued to prevail over the pair. MPs pressurizing May to leave the office at the earliest. However, on the technical side, the near-term trend indicates bullish prospects.
The Cable remained capped under 1.2688 levels in the morning session. After remaining silent near the opening levels, the GBP/USD pair showcased a small upliftment over Dollar fall.
In the Asian session, the USD Index was trading lower amid rate cut hopes. Last day, US reported poor Unemployment figures, Manufacturing Activity Index, and New Home Sales Data. Such weaker US data revealed the adverse condition of the economy. Hence, Investors set in expectations of a nearby Fed rate cut, which could help the US economy recover.
At around 08:11 GMT, the Greenback was struggling near 97.78 levels. However, risk-off conditions remain alive as bearish USD-events have lined up later today.
Over to the Brexit, the overall scenario remains uncertain. Tories continued to pressurize May to come up with her departure timetable. EU Elections are going on, and Nigale Farag’s Brexit party may eat away Conservatives’ votes. As previously announced, UK PM May was supposed to come up for her fourth attempt. Nevertheless, the odds for rejection even this time seems self-evident.
House would initiate processes to elect a new Leader for the UK, hoping he/she to resolve the Brexit issues. Majority of the MPs expect Boris Johnson to take over May’s position.
Meanwhile, the US President is set to visit the UK in the first week of June. And, for the time being, May would stay in position on his arrival.
GBP/USD Specific Events
A few moments ago, the UK April Retail Sales figures reported higher numbers over bearish market expectation. The Retail Sales YoY reported 5.2% in comparison to the 4.6% estimates. Such positive UK reports despite Brexit chaos shows the strength in the robust UK economy. The GBP/USD pair gained an uptick following the sound reports marking day’s high near 1.1296 levels.
In the European session, the US April Nondefense Capital Goods Orders Excluding Aircraft will get released. It is the most significant GBP/USD influencing event for Friday. The Street analysts expect this Nondefense Goods data to come negative 0.3% this time. Further, the Durable Goods Orders excluding, Defense and Transport will release. This time the market expects lower reading with these reports. Laterwards, the April Durable Goods Order will get published. The Consensus remains bearish with their estimates and expects the data to report a negative 2% today.
The Cable appeared below the 100-days and 200-days Simple Moving Averages (SMA). This position of the GBP/USD pair indicated a long-term bear call. However the significant 50-days SMA hovered below the pair, alluding near-term bullish prospects. The pair seems to continue the downtrend which began from May 6. The Triangle positioned in the lower areas of the 1-Hour Chart has a trending base, and this indicates minor corrections. The Relative Strenght Index (RSI) stood at 57 levels, referred a heavy buying.