Currencies

UK Retail Sales Soar in January to Erase December Slump, GBP Unfazed


Pound Sterling (GBP/USD) Analysis

  • UK retail sales rose an impressive 3.4% to overcome December’s 3.3% decline
  • GBP/USD unphased by the report after a busy week, filled with data
  • Fed speakers, US PPI and the University of Michigan consumer sentiment report up next
  • The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library

UK retail sales rose an impressive 3.4% in January, recovering December’s surprising drop of 3.3%. The dismal December print was chalked up to Christmas gifts being bought during the Black Friday discounts in November and partially due to plans to spend less in light of the cost of living, according to nearly half of surveyed respondents.

The positive news comes just one day after the UK confirmed its economy had dipped into recession in the final quarter of 2023. Also this week, inflation was unchanged and the labour market proved resilient, just a few stats that will likely see Bank of England officials towing the line when it comes to rate cut expectations.

Customize and filter live economic data via our DailyFX economic calendar

Consumers landed up paying more for less as the ‘value’ statistic, which captures the price aspect of sold items, rose faster (3.9%) than the volume component (3.4%).

Source: ONS, prepared by Richard Snow

Recommended by Richard Snow

Introduction to Forex News Trading

GBP/USD Immediate Reaction

The pound reacted favourably to the data but ultimately declined back towards levels witnessed ahead of the release. The pound is on track for a softer week against the dollar as the pair attempts to break below the broad trading range.

GBP/USD 5-Minute Chart

Source: TradingView, prepared by Richard Snow

The daily chart reveals the two recent attempts to break out of the trading range with the first attempt falling short due to a lack of momentum and sufficient support around the 200-day simple moving average.

Recommended by Richard Snow

How to Trade GBP/USD

The underside of the horizontal trading range has also been effective in previously containing bears but may now provide resistance as prices reveal a tendency towards the downside – evidenced by increasing downward momentum showed by the MACD indicator. Later today US PPI data is due alongside comments from prominent Fed members, Michael Barr and Mary Daly, finished off with the University of Michigan consumer sentiment preliminary report for February. Keep an eye on inflation expectations in the report as broader sentiment continues to improve at a decent pace.

GBP/USD Daily Chart

Source: TradingView, prepared by Richard Snow

— Written by Richard Snow for DailyFX.com

Contact and follow Richard on Twitter: @RichardSnowFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.





Source link

Leave a Response