GBP/USD: Trading the British Retail Sales Oct 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.

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. Traders should treat this indicator as a market-mover.

Retail Sales edged higher in August, posting a gain of 0.2%, which matched the forecast. The upward trend is expected to continue, with the markets expecting a gain of 0.3% in September.

Sentiments and levels

The US may be moving away from a rate hike in 2015, and this could boost rival currencies such as the pound. Still the US economy is stronger than that of the UK, and weak global conditions may lead to more investors seeking safety with the US dollar and dumping the British pound. So, the overall sentiment is neutral on GBP/USD towards this release.

Technical levels, from top to bottom: 1.5682, 1.5590, 1.5485, 1.5341, 1.5269 and 1.5163.

5 Scenarios

  1. Within expectations: 0.0% 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: 0.6% to 1.0%: An unexpected higher reading can send GBP/USD above one resistance line.
  3. Well above expectations: Above 1.0%: Such an outcome would likely propel the pair upwards, and a second resistance line might be broken as a result.
  4. Below expectations: -0.5% to -0.1%: A reading in negative territory could push GBP/USD below one level of support.
  5. Well below expectations: Below -0.5%: 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.

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