UK retail sales preview: What to expect of GBP/USD?

The GBP/USD pair is seen trading quite choppy so far this session, wavering back and forth in a 50-pips range below 20-DMA, as the bulls await fresh impetus for the next push higher. The latest leg higher in the cable is mainly driven by broad based US dollar weakness on uncertain Fed, while a slew of recent upbeat UK economic data also keeps the sentiment buoyed around the GBP.

Next of note for the major remains the UK retail sales data due later this session at 0830GMT, with markets expecting the retail trade to rebound in July.

Retail sales to creep higher in July

The retail sales data is expected to rebound 0.1% m/m in July, while retail sales are expected to edge 3.9% higher y/y. In June, retail sales fell by 0.9% over the month, the biggest decline in six months on Brexit-related uncertainty.

A better-than expected retail sales report could provide extra legs to the ongoing bullish momentum in the GBP/USD pair, driving the rate above 1.31 handle. While a negative surprise would knock-off the pair towards 1.2976 – yesterday’s low.

GBP/USD Technical Levels

Haresh Menghani, Analyst at FXStreet explains, “The pair lacked follow through buying interest and remained capped at 20-day SMA. Hence, a subsequent drop back below 1.3000 psychological mark is likely to exert further selling pressure that could drag the pair back towards 1.2955 intermediate support before the pair eventually drops back below 1.2900 handle to retest recent daily lows support near 1.2870-65 area.”

“Alternatively, a sustained break above 1.3070-90 strong resistance now seems to pave way for extension of the pair’s near-term recovery, initially towards 1.3130 level en-route 1.3160-70 horizontal area ahead of its next major resistance near 1.3220-30 zone.”