The British Pound is trading on the back foot with increasing calls the corrective rally from the low of 1.3835 has ended and the bears may have regained control of the pair ahead of the UK retail sales release.
Retail sales could print weaker-than-estimates
Markets expect the retail sales to print at 3.8% y/y and -0.7% m/m. The actual figure may print lower than estimates as the lead indicator – British Retail Consortium sales figure released on March 7th had shown a sharp slowdown.
The BRC figure came in at 0.1% in February, which is well below the January figure of 2.6%. But the data received little/no attention on March 7. In fact, the pair closed with gains on March 7th.
This indicates the markets have not priced-in the weakness in advance and we could see the pair descend lower to 1.4032-1.40 levels in case of a weaker-than-expected actual print. On the other hand, a positive surprise would help Cable trim losses heading into an extended weekend.
GBP/USD Technical Levels
The spot currently trades around 1.4085, with immediate hurdle at 1.41 handle. A break higher if followed by acceptance above the rising trend line hurdle at 1.4160 may trigger unwinding of shorts initiated in the NY session yesterday and push the spot higher to 1.42 levels.
Conversely, a break below 1.4079 (Jan 21 low) would add credence to bearish break from rising trend line witnessed yesterday and result in a drop to 1.4032 (23.6% of 1.4669-1.3835), under which psychological support at 1.40 could be put to test.
(Market News Provided by FXstreet)
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