GBP/USD: Key Levels to Watch with UK Retail Sales in Focus

Summary:

GBP/USD is rebounding after Thursday's plunge. The focus is now on UK retail sales; forecasted at 3.5% YoY from the previous -3.7%.

GBP/USD is rebounding after Thursday’s plunge. The decline was the market’s reaction to better-than-expected US initial jobless claims. The reading of 547,000 was higher than the predicted 617,000. Subsequently, the US dollar rose from an intraday low of 91 to 91.41.

Investors are now keen on the UK retail sales scheduled for release in today’s session. After about three months of lockdown, the economy’s gradual reopening began last week. The Google mobility data showed that the number of consumers visiting various entertainment and retail stores rose by 24% of the average levels set in January 2020. In the previous week, the numbers fell below the average levels by 50%.

Analysts expect March retail sales YoY to be at 3.5% compared to the previous -3.7%. However, on a month-on-month basis, the predicted 1.5% is lower than February’s 2.1%.

GBPUSD Technical Outlook

GBP/USD has recouped some of its losses from the previous session. On Thursday, the pair dropped from an intraday high of 1.3949 to 1.3824. It has since risen to the current 1.3859; up by 0.16%. Notably, it is finding support at the lower Bollinger band at around 1.3825.

It is likely to ease on its rebound at 1.3850 as investors await the UK retail sales. With better-than-expected figures, it will move higher to the middle Bollinger band at 1.3900. Beyond that point, the next levels to watch out for are 1.3950 and 1.3980, which will be key resistance levels as the bulls keep their eye on the psychological 1.4000.

However, this thesis will be invalidated by a move below 1.3800. If that happens, the bears will be targeting 1.3750 and 1.3700.