Gbpusd rises despite UK retail sales decline ahead of important US economic data releases

GBPUSD Analysis

Performance after Tuesday
Period	Pct	Chg	Momentum
Tuesday	0.67%	83 Pips
Week to-date	0.41%	51.4 Pips
February	0.14%	17.8 Pips

Upcoming key events (London Time)

Wed 01:30 PM USD CPI Inflation Rate (12-mth)
Wed 01:30 PM USD CPI Inflation Rate excluding Food and Energy sectors (12-mth)
Wed 03:00 PM USD Federal Reserve Chair Jerome Powell testifies
Thu 07:00 AM GBP GDP (3-mth)
Thu 01:30 PM USD PPI excluding Food and Energy sectors (12-mth)

What happened lately

In the United Kingdom, the BRC Like-For-Like Retail Sales over a 12-month period have seen a decline, falling to 2.5% in January from 3.1% in December. This decline indicates a reduction in consumer spending, suggesting potential concerns about economic confidence among consumers. Retail sales figures are a key indicator of consumer confidence and spending power, reflecting the overall economic health. The downward trend could signal challenges for the UK’s economic growth if consumers continue to tighten their spending.

In the United States, significant economic events are on the horizon, including important data releases and a public testimony by the Federal Reserve Chair, Jerome Powell. On Wednesday, markets will be closely watching the release of the CPI Inflation Rate and the CPI Inflation Rate excluding Food and Energy sectors, which are both high-impact events. These metrics will give insights into inflation dynamics within the US economy. Following this, the testimony by Jerome Powell can offer crucial hints on the Federal Reserve’s future monetary policy direction and their stance on tackling inflation. Additionally, on Thursday, the PPI excluding Food and Energy sectors will be released, providing further clarity on inflation pressures.

For the GBPUSD currency pair, the impact of these economic signals and events is multifaceted. The recent rise of 0.67% in GBPUSD to 1.24430 on Tuesday reflects a positive sentiment towards the British pound despite the decline in retail sales figures. This may be attributed to other underlying factors, including market anticipation of upcoming GDP data. The UK’s GDP release will be pivotal, potentially influencing the direction of the GBP should it deviate from market expectations. Simultaneously, the US economic data and Powell’s testimony are poised to impact the USD side of the pair significantly. If US inflation does not align with market forecasts, or if Powell hints at shifts in monetary policy, volatility could ensue, consequently affecting the GBPUSD. Traders should be attentive to these events and their outcomes as they navigate potential fluctuations in the currency pair’s valuation.

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What can we expect from GBPUSD today?

GBPUSD on Tuesday rose 0.67% to 1.24430. Price is above 9-Day EMA while Stochastic is falling.

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

Looking ahead for the day, immediate upside resistance level is R1 at 1.24876 with break above could target R2 at 1.25323 or figure level area. While towards the downside, we are looking at daily low of 1.23321 as an important support. Break below this level could weaken the current bullish momentum. A break above 1.24545 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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