- Summary:
- EURGBP hit new six-month lows ahead of the UK retail sales report. With consumer spending missing forecasts, will the pound be able to hold on to its gains?
UK retail sales report for the month of October showed that consumer spending declined by 0.1%. The figure disappointed market forecasts which called for a 0.2% uptick. Core retail sales also printed a negative reading of 0.3% versus the consensus of 0.2% growth. Year-on-year, consumer spending is up by only 3.1% and missed the 3.7% estimate.
GBP pairs moved ahead of the release of the report. EURGBP dropped to a new 6-month low at 0.8549 and broke support at 0.8556. This was before the disappointing figures hit the newswires. As of this writing, the currency pair has recouped some of its losses and is now trading around 0.8560.
EURGBP Outlook
There is some resistance around the lows from November 12 and from this morning’s Asian session. The area around 0.8560 also coincides nicely with the 38.2% Fib level (when using the Fibonacci retracement tool to draw from this morning’s swing high to the European session swing low). If sellers are able to defend this level, we could see EURGBP head to 0.8492 where it previously established lows back in March and April 2019.
On the other hand, should the worse-than-expected consumer spending numbers temper the pound’s gains, the next level to look at would be around 0.8569 where the 100 SMA and 200 SMA could provide resistance.Download our latest quarterly market outlook for our longer-term trade ideas.