GBP/USD: Trading the British Retail Sales Jun 2015

British Retail Sales is considered one of the most important economic indicators. A reading that is higher than the market forecast is bullish for the British pound.

Update: UK Retail Sales +0.2% – GBP/USD extends gains

Here are all the details, and 5 possible outcomes for GBP/USD.

Published on Thursday at 8:30 GMT.

 Indicator Background

Retail Sales is the primary gauge of consumer spending, a critical component of economic growth. An unexpected reading can have a major impact on the movement of GBP/USD.

Retail Sales bounced back in April with a strong gain of 1.2%, crushing the estimate of 0.4%. However, the good news is not expected to extend to the May report, with the estimate standing at a flat 0.0%. Will the indicator repeat and beat the upcoming estimate?

Sentiments and levels

The US dollar has run into some turbulence, with the British pound taking full advantage and racking up impressive gains. However, the FOMC statement could lead to a correction, with the Fed expected to raise rates in September. Inflation remains very low in the UK, and if this week’s inflation numbers are poor, the pound could lose some of its recent luster. So, the overall sentiment is bearish on GBP/USD towards this release.

Technical levels, from top to bottom: 1.5746, 1.5682, 1.5590, 1.5485, 1.5350 and 1.5270.

5 Scenarios

1. Within expectations: -0.3% to +0.6%: In such a case, the pound is likely to rise within range, with a small chance of breaking higher.
2. Above expectations: +0.7% to +1.1%: An unexpected higher reading can send GBP/USD above one resistance line.
3. Well above expectations: Above +1.1%: Such an outcome would likely propel the pair upwards, and a second resistance line might be broken as a result.
4. Below expectations: -0.8% to -0.4%: A weak reading could push GBP/USD below one level of support.
5. Well below expectations: Below -0.8%: A sharp contraction by the indicator could push the pair lower and break a second support level.

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