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Sterling Resolute After Fiscal Statement, UK Retail Sales

by Ozva Admin

GBP/USD News and Analysis

  • Upbeat retail sales (MoM) are overshadowed by continued declines in purchased volumes
  • GBP/USD remains elevated, above the 200 DMA but below the psychological level out of 1,200
  • The economic calendar looks to be quite light next week, offering little resistance to the current direction in the near term.
  • The analysis in this article makes use of chart patterns and key support and resistance levels. For more information, visit our complete educational library

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Upbeat Retail Sales (MoM) Overshadowed by Declining Volumes Purchased

UK retail sales improved by 0.6% in October compared to September. That statistic alone seems pretty positive, but year-over-year volumes were down a hefty 6.1% compared to October 2021.

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The ONS UK retail sales report showed that food was the main laggard from the October report, with volumes down 0.4%. However, positive readings across non-grocery stores, non-grocery retail and food more than made up for it.

The main problem facing UK consumers this year and next is a reduction in real household income, which the Office for Budget Responsibility (OBR) forecasts will fall by 7%. in the next 2 years, which will bring households back to 2013 levels.

The chart below underscores the overall retail trend of declining sales volumes since the peak in spring 2021, suggesting that the holiday season is likely to be more reserved.

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Source: ONS (National Statistics Office)

GBP/USD Technical Considerations

The daily chart reveals a period of consolidation ahead of that psychologically important Level 1.2000, with what appears to be an uptrend pennant forming The pennant is generally seen as a bullish sign, suggesting that holding above 1.2000 could mean more joy for the pound against the dollar. In such a case, the true test of possible bullish continuation would be holding above 1.2000 after a pullback that could see the next resistance zone 1.2300 is focused.

Trend line support (previous trend line resistance) supports cable, followed by 2016 lows of 1.1685 and 1.1410.

GBP/American dollar daily chart

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Source: TradingView, compiled by richard snow

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How to trade GBP/USD


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of customers are short net.

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Daily -10% 12% 1%
Weekly 3% -1% 0%

GBP/USD:Retail trader data shows 43.59% of traders are net long with the ratio of traders short to long at 1.29 to 1.

We usually take a view contrary to the sentiment of the crowd.and the fact that traders are net short suggests GBP/USD prices you can keep going up.

The number of net long traders is 4.15% lower than yesterday and 2.22% lower than last week, while the number of net short traders is 3.81% lower than yesterday and 2 .32% lower than last week.

Positioning is net shorter than yesterday, but less net short than last week. The combination of current sentiment and recent changes gives us another GBP/USD mixed trading outlook.

The economic calendar is fairly light next week, with US Durable Goods, Michigan Consumer Confidence and the FOMC minutes the only high-level scheduled risk events for the week.

— Written by Richard Snow for DailyFX.com

Contact and follow Richard on Twitter: @RichardSnowFX

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