FXEMPIRE
All

GBP/USD Daily Forecast – UK Retail Sales Miss Spurs Rate Cut Speculation

Retails sales in the UK were much worse than analysts expected, fueling rate cut expectations and putting Sterling under pressure.
Jignesh Davda
GBP/USD

Retail sales in the UK fell 0.6% in December, marking a fifth straight month without growth. GBP/USD has come under pressure and has nearly erased the gain from Thursday.

Analysts were remarkably off-target in their forecasts which has likely caught speculators off guard.

Analysts had called for a rise of half a percent versus the reported decline of 0.6%. In addition to the drop in sales in December, there was a downward revision for the prior month to -0.8% versus the originally reported decline of 0.6%.

With recent talks of a potential rate cut from several members Bank of England’s monetary policy committee, there is little reason to believe the bank won’t act at their next meeting following this report.

The Bank of England’s next monetary policy decision will take place on Thursday, January 30. The only other major data release ahead of it is manufacturing and services PMI data which will be released next week.

Technical Analysis

GBP/USD has fallen and is currently trading near a horizontal level at 1.3050. The pair closed near this level last week and gapped below at the open this week.

GBP/USD Hourly Chart

Some buying is seen from the level and the decline has somewhat stalled out for now. In the event of a bearish break, the next level of support for the pair comes in at 1.3013.

Beyond that, there is an important support zone between 1.2960-1.2990 which triggered a three-consecutive day recovery this week.

Rallies in the pair are likely to be met with sellers considering the outcome of the retail sales report.

The dollar has regained upward momentum which is also an important consideration for GBP/USD traders.

The US dollar index has erased losses from the early week and has returned to positive territory. The greenback got a boost from yesterday’s US retail sales beat and the index has been well bid since.

Bottom Line

  • Sterling has come under pressure after a three-consecutive day recovery after UK retail sales figures came in well below analyst expectations.
  • The dollar has regained upward momentum following the US retail sales report on Thursday.
Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US