GBP/USD - Eyes range breakout, lead indicators say UK retail sales may miss estimates
|- GBP/USD struggles to break free of the recent trading range.
- Lead indicators - BRC and Visa survey - suggests the official retail sales could miss estimates.
From Nov, 7, the GBP/USD pair has been restricted largely to a narrow trading range of 1.31 to 1.32. Occasional dips below 1.31 have been short-lived, while the bulls have struggled to keep the pair above 1.32 handle.
Focus on UK retail sales
Consumption, as represented by the UK retail sales, is seen rising 0.1% m/m in Oct. vs. a 0.8% drop registered in September. The annualized figure is seen falling 0.6% vs. a 1.2% gain in Sept. Core retail sales (which excludes fuel) are seen coming in at 0.0% m/m and -0.4% y/y.
Lead indicators signal data could miss estimates
According to credit card provider Visa, consumer spending dropped 2% in October; its fastest year-on-year decline in four years. Visa blamed the drop in real wages for the sharp decline in the spending.
Meanwhile, British Retail Consortium (BRC) released earlier this month showed retail spending dropped 1% in October on a like-for-like basis last month; its fastest rate for any October since 2008.
Clearly, the official data could miss estimates, as indicated by the dismal picture painted by the lead indicators.
Cable could drop to the recent low of 1.3039 and may extend losses to 1.30 on weaker-than-expected UK retail sales number. On the other hand, strong data could lift GBP higher to 1.3254 (50-day MA).
GBP/USD Technical Outlook
FXStreet Chief Analyst Valeria Bednarik writes-
"From a technical point of view, the pair has settled around the 50% retracement of its latest daily slide, and with intraday readings presenting a neutral-to-positive stance, as the price is above a flat 20 SMA, while technical indicators lost directional strength, but hold above their mid-lines. The pair would need to surpass the 1.3220 level to look a bit more constructive to the upside, while below 1.3100, the risk will lean towards the downside."
Support levels: 1.3130 1.3095 1.3060
Resistance levels: 1.3185 1.3220 1.3260
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