It keeps getting better for the GBPUSD pair. The pair is up by 0.18% and is trading at 1.3235, which is the highest it has been since December 2019.
The GBPUSD is reacting to relatively strong retail sales numbers from the UK. According to the ONS, retail sales continued to do well in July as the economy continued to reopen. The overall sales rose by 3.6% from June and by 1.4% on an annualised basis.
This growth was better than what analysts were expecting. In June, the sales rose by 13% on a MoM basis and dropped by 1.6% on an annualised basis. Meanwhile, the core retail sales rose by 2% from June and by 3.1% on an annualised basis.
The strong performance of retail sales was mostly because the number of coronavirus infections in the country.
The GBPUSD pair is also reacting to the affairs in the borrowing market. According to the ONS, the public borrowed more than £25.94 billion in July. That was better than the borrowing of £29.3 billion that analysts were expecting.
Meanwhile, analysts are waiting for the manufacturing and services PMIs that will come out later today. These numbers will provide more information on whether the UK economy is growing.
GBPUSD forecast
The GBPUSD pair has been in a strong upward trend, as evidenced by the weekly chart below. The pair has climbed in seven of the past nine consecutive weeks. It is also trading along the 61.8% Fibonacci retracement level. This retracement connects the highest point in April 2018 to the lowest level this year. The pair is also above the 50-day and 200-day EMA.
Therefore, I suspect that the bullish trend will continue in the near term, although Brexit issues could lead to more volatility. On the flip side, a move below 1.3000 will invalidate this trend. This is both an important psychological level that is also slightly above the 50% retracement level.
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GBPUSD daily chart
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