GBP/USD dropped to 1.4082 levels on Wednesday as heightened Brexit fears continued to scare investors out of Sterling positions. Meanwhile, Fed’s Bullard became the latest member to hit the wires with hawkish views, which added to the bullish tone around USD. The spot closed the day on a weaker note at 1.4114, marking a breach of rising trend line on the daily closing basis.
Eyes UK retail sales
UK retail sales are likely to show a sharp slowdown in consumption in February. British Retail Consortium data released on March 7 showed hopes for a strong start to the year for the high street have faded as retail sales growth slowed almost to a standstill last month. The BRC figure came in at 0.1% in February, which is well below the January figure of 2.6%.
Consequently, odds of a weaker-than-expected official UK retail sales figure are high and may result in another wave of selling towards 1.40 handle. However, a better-than-expected figure would be a positive surprise and could trigger a rebound in Sterling 1.4160 levels.
A combination of a better-than-expected UK retail sales figure and weaker US durable goods data, dovish Fed speak could set the tone for the formation of the inverse head and shoulder on the daily chart with neckline at 1.4490.
Technicals – Watch out for a rebound
Sterling’s drop from the last week’s high of 1.4515 followed by a break below rising trend line yesterday has left the doors open for a drop to 1.4032 (23.6% of 1.4669-1.3835) -1.40 levels.
Daily RSI’s dip below 50.00 further adds to credence to the bearish break from the rising trend line seen yesterday.
However, the oversold RSI on the hourly and 4-hour chart could result in a corrective rally to 1.4160 (rising trend line hurdle).
Moreover, a rebound from the range of 1.3950-1.41 followed by a break above rising trend line hurdle would shift risk in favor of a formation of inverted head and shoulder formation with neckline at 1.4490.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
AUD/USD gathers strength to near 0.6550 on weaker US Dollar
The AUD/USD pair attracts some buyers to near 0.6540 during the early Asian session on Monday. The US Dollar Index (DXY) declines slightly after reaching a new two-year high despite the strong US S&P Purchasing Managers Index (PMI) data.
EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Elections, inflation, and the bond market
The Federal Reserve believes inflation is no longer a concern for consumers and the time has come to ensure the rate of change of prices does not decline any further.
Read more
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.