The GBP/USD pair is trading lower this Thursday after mixed US retail sales data were offset by a strong Empire State Manufacturing Index number. The GBP/USD’s price action this week has been dominated largely by US fundamentals.
Core Retail Sales in the US shrank by 0.3%. The market had predicted the figure to come out flat at 0.0%, the same as the previous number. The headline number gave a higher print, coming in at 0.3% (versus consensus of -0.1% and previous of -0.4%).
The standout number came from the Empire State Manufacturing Index data, which came in at -1.5. This was a stronger-than-expected improvement, as the market consensus was for a -12.7 reading. The last number had come in at -31.3.
The data set was enough to keep the GBP/USD lower by 0.27% on the day, even as the market prepares for the FOMC decision on 21 September and the BoE’s rate decision on 22 September. Prior to this double-impact news release, the fundamental trigger of note comes from the US side of the equation, which is the University of Michigan’s Consumer Confidence survey report.
The GBP/USD is trading within the range formed by the 1.14538 support and the 1.16566 and resistance barrier. A breakdown of the former opens the door for a slide toward the 27% Fibonacci extension at 1.13323. A further dip targets the 1.11765 price mark, where the 61.8% Fibonacci extension is located.
On the flip side, a bounce on the 1.14538 support which eventually takes out the 1.16566 resistance, targets the 13 September top at 1.17298 (61.8% Fibonacci retracement of the price swing from 26 August high to the 5 September low).
Above this level, 1.18061 (12 July low and 78.6% Fibonacci retracement level) serves as the next upside target. A continued advance brings 1.19014 (5 July low and 26 August high) into the picture, leaving the neckline of the completed double top pattern at 1.19991 as the next target in line for the bulls.