GBPUSD extended its gains in Friday’s New York trading session as strong UK economic fundamentals and a risk-on sentiment exerted pressure on the dollar. The cable traded at 1.3026 at the time of writing, having gained 0.1 percent on the daily chart. The pair is building on Thursday’s marginal gain which heralded an upward reversal from the 1.3000 support level.
The UK’s economy reported strong retail sales on Friday, signaling a stable outlook for its outlook. Retail Sales grew by 3.9 percent year-on-year in September, substantially above the forecast estimate of 3.2 percent and the August figure of 2.3 percent. In addition, the Core Retail Sales growth rate came in at 4.0 percent, above the forecast rate of 3.2 percent.
Elsewhere, China’s decision to announce another round of stimulus for its economy set in motion a risk-off sentiment in markets. The People’s Bank of China announced that it will inject as much as $112 billion into the stock market through two funding schemes. The scheme will support the stock market, which had started feeling shocks in recent days after investors grew cold feet over China’s reluctance to be more aggressive. That has eased the demand for the dollar and injected upside momentum into GBPUSD.
GBPUSD pivots at 1.3030, and the upside will prevail if the pair stays above that level. With the upward momentum in play, initial resistance will likely come at 1.3054. However, a strengthening of the momentum could break above that level to test the second barrier at 1.3077.
On the other hand, moving below 1.3030 will favour the sellers to take control. The downward momentum will likely find the first support at 1.3003. However, if they extend that control, the currency pair could break below the first support to invalidate the upside narrative. Also, the downside could extend to test the second support at 1.2977.
This post was last modified on Oct 18, 2024, 18:01 BST 18:01