Gbpusd rises amid UK retail recovery and US manufacturing slowdown

GBPUSD Analysis

Performance after Monday
Period	Pct	Chg	Momentum
Monday	0.65%	80.3 Pips
Week to-date	0.69%	85.4 Pips
January	-0.27%	-34.1 Pips

Upcoming key events (London Time)

Wed 07:00 PM USD FOMC Meeting Minutes

What happened lately

In the United Kingdom, the BRC Like-For-Like Retail Sales for December demonstrated a notable recovery, increasing to 3.1% from a negative performance of -3.4% in November. This improvement suggests a boost in consumer spending during the holiday season, which is a positive sign for the U.K. retail sector, reflecting consumer confidence and potentially enhancing overall economic activity. The positive change indicates that retailers experienced greater sales volumes and could imply a strengthening of the retail market and subsequently support economic growth. This turnaround in retail sales figures provides a sense of optimism for the U.K. economy.

In contrast, data from the U.S. Census Bureau revealed that U.S. new orders for manufactured goods decreased by 0.4% in November, following a revised increase in October from 0.2% to 0.5%. The decrease in manufacturing orders suggests a slowdown in the manufacturing sector, signaling potential challenges in production and demand within the U.S. economy. This downturn may have roots in various economic factors, including supply chain disruptions or fluctuating demand levels during the period, and could be indicative of broader economic trends.

Following these economic developments, the GBPUSD pair rose by 0.65% to 1.25155. The appreciation in the value of the British pound against the U.S. dollar can be linked to the favorable retail sales data from the U.K., which reflects stronger economic performance and boosts confidence in the pound. On the other hand, the decrease in U.S. manufacturing orders likely contributed to a weaker dollar, as it indicates potential vulnerabilities in the U.S. economy. Traders and investors may have reacted to these contrasting economic indicators by favoring the pound over the dollar, thereby influencing the exchange rate. Furthermore, the anticipation of the upcoming FOMC Meeting Minutes in the U.S. may also cause market participants to adopt a cautious stance on the dollar until further insights into future monetary policy directions are revealed, contributing to the current strength of the GBPUSD exchange rate.

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What can we expect from GBPUSD today?

GBPUSD on Monday rose 0.65% to 1.25155. Price is above 9-Day EMA while Stochastic is rising.

Updated daily direction for GBPUSD looks bullish as the pair ended higher after Monday trading session.

Looking ahead for the day, immediate upside resistance level is R1 at 1.25719 with break above could target R2 at 1.26282 or figure level area. While towards the downside, we are looking at daily low of 1.24172 as an important support. Break below this level could weaken the current bullish momentum. A break above 1.25509 may suggest continuation after recent positive movement.

For the week to-date, take note that GBPUSD is mixed as compared to the prior week.

Key levels to watch out:

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