GBPUSD is trading in a tight, 20-pip range in today’s Asian session. As of this writing, the currency pair is trading at 1.2351, ahead of the UK’s retail sales report for March.
Due at 7:00 am GMT, the Office for National Statistics is expected to report a 4.5% drop in consumer spending last month. This would then follow the 0.3% contraction we saw in February. A worse-than-expected reading could be bearish for GBPUSD because this would suggest that the coronavirus has weighed on the economy more than anticipated.
On the other hand, it’s not improbable for consumer spending to post an upside surprise. Earlier this week, Australia’s retail sales report printed a stellar figure despite the pandemic. If the UK’s retail sales report comes in better than expected, GBPUSD may just trade higher.
Download our Q2 Market Global Market Outlook
GBPUSD Outlook
On the 4-hour time frame, it can be seen that GBPUSD has been trading lower after making a series of consecutive highs. If there are enough sellers to push the currency pair to what could be the neckline support at 1.2280, a head and shoulders chart pattern would be completed. This is widely considered as a bearish reversal indicator. Should there be enough selling pressure to push GBPUSD below neckline, the next floor could be at 1.1470.
But again, I will reiterate that the currency pair needs to at least complete the chart pattern first. I would be doubtful that GBPUSD is headed lower if it closes above the 100 SMA at 1.2407. This could be a sign that there are still buyers left in the market that could push the exchange rate up to yesterday’s highs at 1.2643.
Don’t miss a beat! Follow us on Telegram and Twitter.
More content
- Follow me on Twitter.
- Download our latest quarterly market outlook for our longer-term trade ideas.
- Do you enjoy reading our updates? Become a member today and access all restricted content. It is free to join.