GBP/USD currency pair as of writing at 1.3320. After cratering through five straight days in the red, it appears that Amazon has found a floor in its price. Market participants are laser focused on the joint release of UK Retail Sales for September. Looking ahead, analysts are forecasting this data to be even more bearish news for the pair. Traders are betting big on the next release. They foresee a bearish GBP/USD targeting a two-month bottom at 1.3248, with high potential for it to test a six-month low at 1.3141.
The UK Retail Sales numbers are one of the most important pieces used to gauge the health of the British economy. What’s more is their profound control over their own currency market. We expect a drop of 0.2% month-over-month (MoM) for September—with a rise of 0.5% in August. Should the data come in as is typically the case, it could add to bearish pressure on the GBP/USD pair.
Current Market Conditions
The pound dollar currency pair has has a horrible week. Traders are still grappling with a multitude of economic indicators that could further shift market confidence. After five straight days of declines, the pair has shown signs of stability near the new 1.3320 level. This relative stability comes in the context of ongoing anxiety about the state of the UK’s economy.
The Retail Sales report is the big piece of that puzzle in this assessment. That expected decline might indicate softening consumer demand, which plays a pivotal role as a pillar of economic expansion. A weaker than expected print could cause speculators to adjust their bets. This would leave the pair on course for a two-month low of 1.3248.
Market participants’ eyes were not only glued to this morning’s retail sales. They are counting oh-so-lovingly on good old UK Purchasing Managers’ Index (PMI) data, from S&P Global, due at 0930 GMT today. This index is a major barometer for business activity and sentiment. It provides ahead-of-the-curve clues to dovish or hawkish economic trends that might be driving the GBP/USD currency pair.
Technical Analysis
On the technical side, the GBP/USD currency is moving between major resistance and support zones. The first hurdle for a clear move upward is at the nine-day Exponential Moving Average (EMA) of 1.3365. A breakout above this level would be significant enough to signal the possibility of recovery and improve short- and medium-term price momentum.
On the downside, the 50-day EMA is currently 1.3433, another key barrier. A meaningful break above this level would likely indicate a permanent change in market sentiment toward bullishness. This would allow the GBP/USD pair to aim for its monthly peak at 1.3527.
The market will be watching the story closely, so stay tuned. Smart traders have already begun eyeing possible moves as economic data forces big shifts in these technical levels. Technical outlook and fundamental facts will remain key in driving the GBP/USD pair’s direction going forward. This dynamic especially defined the near-term play.
Future Considerations
Retail sales and PMI data are in the spotlight, but there’s plenty more to keep an eye on. Major economic measures, including US Consumer Price Index numbers, will be coming due later in the week, most notably on Friday. Collectively, these statistics ought to give important clues as to continued inflationary pressures throughout the United States, which might in turn further influence the valuation of currencies.
As traders continue to weigh positive US data against negative UK data, we can expect continued volatility in the GBP/USD pair. The potential for downward pressure remains pronounced if UK retail sales disappoint, while strong US inflation figures may exacerbate existing concerns regarding the British economy.