- Summary:
- GBPUSD traded lower yesterday on disappointing retail sales and the BOE meeting. Will today's roster of economic reports offer some support for the pound?
GBPUSD extended its losing streak to a fourth day in a row yesterday. It opened at 1.3075 and tapped in intraday high at 1.3131. However, the British pound just could not sustain its gains. GBPUSD then traded lower to a bottom of 1.2988 before closing the New York session at 1.3006. Among the major currencies, the British pound was the only one to lose against the US dollar which has been weakened by US President Trump’s impeachment.
BOE Kept Rates Steady, Downgraded Outlook
The Bank of England (BOE) rate decision did not offer any surprise. Policymakers kept rates steady at 0.75% with 2 members voting for a rate cut, 7 were in favor for a hold, and none voted to raise rates. These outcomes were both widely expected by market participants. Additionally, there were no changes made to the central bank’s asset purchase program at 435 billion GBP.
Recent data have, however, forced the BOE to re-assess their economic outlook. Growth is now seen to print lower at 0.1% for the fourth quarter of 2019. It was initially estimated at 0.2%.
Retail Sales Disappoint
The retail sales report for November only confirmed the BOE’s downward revision to growth. It showed that consumer spending declined by 0.6% during the month. It was expected to post a 0.3% growth to follow October’s flat reading.
Economic Data Due Today
Later today, a few reports are due from the UK. At 9:30 am GMT, the current account report for November is eyed to show a 15.7 billion GBP deficit. Meanwhile, the final GDP report for the third quarter is eyed to print at 0.3%.
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GBPUSD Outlook
If sellers continue to dominate today’s trading, the hourly time frame shows potential levels to get in on a short trade. The Fibonacci retracement tool presents the area around 1.3075 as a potential entry. For one, this price coincides with the 61.8% Fib level when you draw from yesterday’s intraday high to low. Secondly, this price acted as a support level in Wednesday’s trading. Reversal candles at this level could confirm my assumption. However, a strong bullish close at 1.3075 may mean that GBPUSD still has room to trade higher, maybe even up to 1.3226 where it found minor resistance on December 12.
On the other hand, it is also possible for us not to see a pull back to the Fib levels anymore. A close below yesterday’s low at 1.2988 could mean that GBPUSD could be headed to its November lows at 1.2765.