Sterling Remains Dovish Despite Upbeat UK Sales Data

The GBP/USD sees itself cycling near 1.3365 heading into Friday’s London markets after managing to pull back somewhat from a six-month low made earlier this week. The Sterling has been hammered by drooping economic figures that pushed the Bank of England to keep interest rates unchanged in May, and meanwhile upbeat sales data has caused investors to hope for hawkish GDP readings to be released later today. The Office for National Statistics reported yesterday that UK retail sales data was better-than-expected at 1.6% in April. In response, the GBP/USD pair posted moderate gains which helped the pair gain some distance from six month low made earlier this week.

GBPUSD Dovish

The mild economic contraction that was expected in the first quarter of 2018 is continuing to extend into 2018’s mid-point and traders are hungry for some good news for a change. Friday’s preliminary GDP figures for the Q1 scheduled to release at 08:30 GMT are expected remain unchanged and the YoY GDP numbers are also expected to remain changed at 0.1%. Meanwhile, Total Business Investment for the first quarter is expected to see dovish readings with forecast at 0.2% while the previous data was at 0.3%.

Investors and Analysts are also looking forward to a speech by Bank of England governor Mark Carney at the Society of Professional Economists’ annual dinner in London which is scheduled at 1320 GMT. This speech is expected to give hits about where the BoE could be heading looking forward. The technical outlook for the Sterling remains on the bearish side. Risk reversal indicators remain stagnant suggesting that the upward movement post UK retail sales data should be short lived and put bias seems to remain unchanged. In the 4 hours chart, the price is unable to advance beyond its 20 SMA, While RSI signal line is moving in neutral range around 45 with a downward incline. If GDP fails to give hand to momentum gained from UK retail sales data, the price is expected to go back to moving around six month lows. Expected support and resistance for the pair are at 1.3330 / 1.3300  and 1.3420 / 1.3455