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UK retail sales beat forecasts, GBP tumbles

Market Analysis

GBPUSD, H1

UK retail sales rebounded more than expected in June, aided by a warm-weather prompted rush on seasonal items. The headline sales figure rose 0.6% m/m, rebounding from a 1.2% m/m contraction in May, which was the biggest negative print in four years. The y/y figure rose 2.9%, up from a 0.9% y/y gain in the month prior. Sterling rallied in the initial minute or so following the release, but has since more than given back those gains, by presently showing a 0.5% decline against the dollar and a 0.4% loss to the euro. Negative real wage growth is likely to keep continue to blight the performance of the retail sector in the months ahead.

Cable logged a high of 1.3019 following about 35 pip spring on UK retail sales data, which showed a forecast-beating rise of 0.6% m/m. The run higher lasted little more than a minute, making a Long Legged Doji candle in the Hourly chart, and the pair has subsequently tumbled to a four-day low at 1.2955. Hence a SHORT hourly position was taken after the pair had a strong bearish candle and manage to break the lower Bollinger bands pattern along with the 200-period SMA. Hence entry was at 1.2953,  while Targets were set at 1.2920 and 1.2890. Support was set at 1.3000, which is the 61.8 Fibonacci Level set since July’s lowest price.

Nevertheless, Parabolic SAR  remain negative since July 18th in both hourly and 4-hour charts.

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Andria Pichidi

Market Analyst

HotForex

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