GBP/USD Plunges As Downbeat UK Retail Sales Weigh

The Great Britain Pound (GBP) extended downside movement against the US Dollar (USD) on Thursday, for the seventh day in a row, dragging the price of GBP/USD to less than 1.7015 following the retail sales news. The sentiment however remains bullish due to Higher High in the recent upside rally.

Technical Analysis

As of this writing, the pair is being traded near 1.7013. A support may be noted around the current level, the 23.6% fib level ahead of 1.6950, the 55 Simple Moving Average (SMA) and then 1.6913, the 38.2% fib level as demonstrated in the following chart.  

GBPUSDDaily

On the upside, the pair is likely to face a hurdle near 1.7095, the intraday high of yesterday ahead of 1.7191, the swing high of the last major rally. A break and daily closing above the 1.7191 resistance area could spur a renewed buying interest, validating a fresh rally towards the 1.7300 milestone.

Britain’s Retail Sales

The retail sales in UK declined unexpectedly to 3.6% in June as compared to 3.7% in the same month of the year before, down beating the median projection of 3.9% increase, a report by the National Statistics Office revealed today. Generally speaking, higher retail sales are considered positive for the economy and vice versa. Thus, a worse than expected actual reading increased the ongoing selling pressure in the price of cable.

US Jobless Claims

The US Labor Department is due to release the jobless claims report today. According to the average forecast of different economists, the number of people of applied for the jobless incentives, during the week ended on July 18 remained 308K as compared to 302K in the week before. Generally speaking, higher jobless claims are considered negative for the US Dollar hence a worse than expected actual outcome will be considered bullish for cable.

Conclusion

Considering the overall technical and fundamental outlook, selling the pair on rallies could be a good option in sort to medium term.

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Usman Ahmed

Usman Ahmed is an individual forex trader and market analyst. He holds a Masters of Business Administration (MBA) degree. His work includes fundamental and technical reports on various currency pairs, commodity futures and stock markets. His technical analysis features price action strategies.

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