The British Retail Sales is a key economic indicator, focusing on UK consumer spending. A reading that is higher than the market forcast is bullish for the pound.
Here are all the details, and 5 possible outcomes for GBP/USD.
Published on Friday at 9:30 GMT.
Indicator Background
Consumer spending is one of the most important components of the economy, and strong numbers in this sector signify growth and an improving economy. Analysts pay close attention to this indicator, as consumer spending and confidence has a ripple effect on the economy, so the indicator can be a market-mover.
The December reading was a disappointment, falling to -0.4% from the previous reading of 0.6%. However, the markets are banking on a strong rebound, with a prediction back in positive territory, at 0.6%. Will the indicator be able to match or beat the higher market forecast?
Sentiments and levels
Economic indicators in the manufacturing and industrial sectors remain weak, and the worsening crisis in the eurozone is weighing on the pound. Thus, the overall sentiment is bearish on GBP/USD towards this release.
Technical levels, from top to bottom: 1.5629, 1.5525, 1.55, 1.5360, 1.5280 and 1.52.
5 Scenarios
- Within expectations: 0.2% to 1%: In such a case, GBP/USD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 1.1% to 1.5%: An unexpected higher reading can send the pair above one resistance line.
- Well above expectations: Above 1.5%: Such an outcome would propel the pair upwards, and a second resistance line might be broken as a result.
- Below expectations: -0.3% to 0.1%: A reading close to the zero level or in negative territory would rattle markets and could push GBP/USD below one level of support.
- Well below expectations: Below -0.3%: A poor reading could push the pound downards and break two or more support levels.
For more about the pound, see the GBP/USD.