GBP/USD: Trading the British Retail Sales Nov 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 disappoint – GBP/USD slips

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

Published on Thursday at 9:30 GMT.

 Indicator Background

Retail Sales is the primary gauge of consumer spending, a critical component of economic growth. Traders should treat this indicator as a market-mover.

Retail Sales surged in September, with a gain of 1.9%, crushing the estimate of 0.3%. This marked the indicator’s sharpest gain since December 2013. The markets are braced for a downturn in October, with an estimate of -0.4%. Will the indicator repeat and beat the prediction?

Sentiments and levels

The guessing game continues as to whether the Fed will raise rates next month. US employment numbers are solid, but inflation remains at low levels. Market expectations for a rate hike currently stand at 66%, and this is certainly bullish for the dollar. So, the overall sentiment is bearish on GBP/USD towards this release.

Technical levels, from top to bottom: 1.5485, 1.5341, 1.5269, 1.5163. 1.5026 and 1.4856.

5 Scenarios

  1. 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.
  2. Above expectations: 0.0% to 0.4%: A reading of zero or in positive territory could send GBP/USD above one resistance line.
  3. Well above expectations: Above 0.4%: Such an outcome would likely propel the pair upwards, and a second resistance line might be broken as a result.
  4. Below expectations: -1.2% to -0.8%: A weak reading could push GBP/USD below one level of support.
  5. 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

Get the 5 most predictable currency pairs

Leave a Reply

Your email address will not be published. Required fields are marked *