UK 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.
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 sharp impact on the movement of GBP/USD.
Retail Sales softened in May with a gain of 0.9%, compared to 1.3% a month earlier. Still, this beat the gain of 0.3%. The markets are braced for a downturn in June, with a forecast of -0.4%. Will the indicator repeat and beat the estimate?
Sentiments and levels
The BoE surprised the markets by remaining on the sidelines and not lowering rates last week, but there’s no way getting around the Brexit shock to the British economy, so the central bank will need to take action. The markets are now expecting a rate cut in August. US numbers have been solid although a rate hike is unlikely in Q3. So, the overall sentiment is bearish on GBP/USD towards this release.
Technical levels, from top to bottom: 1.3426, 1.3276, 1.3142, 1.3064 and 1.2849.
5 Scenarios
- Within expectations: -0.7% to -0.1%: In such a case, the pound is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 0.0% to 0.4%: An unexpected higher reading can send GBP/USD above one resistance line.
- Well above expectations: Above 0.4%. Such an outcome would likely push the pair upwards, and a second resistance line might be broken as a result.
- Below expectations: -1.2% to -0.8%: A weak reading could push GBP/USD below one level of support.
- Well below expectations: Below -1.2%: A sharp contraction by the indicator could push the pound lower and break a second support level.
For more on the pound, see the GBP/USD.