UK Retail Sales is considered one of the most important consumer indicators. This indicator provides analysts and traders with an early look at consumer spending. A reading that is higher than the market forecast is bearish for the US dollar.
Here are all the details, and 5 possible outcomes for GBP/USD.
Published on Thursday at 9:30 GMT.
Indicator Background
Consumer spending is one of the most important engines of economic growth, and strong numbers in this sector signify growth and a healthy economy.
The November release was a major disappointment, with Retail Sales declining 0.8%, which was one of its worst performances of the year. The markets are expecting a turnaround in December, with a forecast of 0.3%. Will the indicator rebound into positive territory this month?
Sentiments and levels
The pound continues to push hard against the US dollar, and took full advantage of the Fed’s announcement to implement Q4. GBP/USD has posted an impressive rally since mid-November, climbing over four cents. Will the rally continue? As we approach the end of 2012, the markets are now focused on the looming fiscal cliff crisis. It is likely that some kind of compromise or stop-gap measure will be reached on Capitol Hill. If the fiscal cliff can be averted or at least delayed, market sentiment would be positive, and this could bolster the pound. So, the overall sentiment is bullish on GBP/USD towards this release.
Technical levels, from top to bottom: 1.66, 1.6475, 1.6343, 1.6247, 1.6122 and 1.6060.
5 Scenarios
- Within expectations: 0% to 0.6%: In such a case, the pound is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 0.7% to 1.0%: An unexpected higher reading can send GBP/USD well above one resistance line.
- Well above expectations: Above 1.0%: Such an outcome would propel the pair upwards, and a second resistance line might be broken as a result.
- Below expectations: -0.4% to -0.1%: A negative reading could push GBP/USD below one level of support.
- Well below expectations: Below -0.4%: In this scenario, the pair could fall and could break a second support level.
For more about the pound, see the GBP/USD.
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