GBP/USD finally moved above 1.30. Don’t be fooled though, that was mainly because of USD weakness after the soft inflation and retail sales numbers.
The GBP, on the other hand, hasn´t been rising tremendously but it has gained strength on every dip. EUR/GBP, for example, has been trading in a range for more than a month, so the GBP has been uncertain.
That might change today though. UK retail sales are due to be released shortly; they´re supposed to increase by 0.4% for the month after a 1.2% decline in the last reading.
On Tuesday, CPI (consumer price index) fell by 0.3% which took some of the weight off the BOE´s shoulders. The price action in GBP/USD has shown that GBP traders are waiting for something to give them direction seeing as it´s been stuck around 1.30 for several trading sessions.
So, if the number is negative, GBP is supposed to take a beating. If the number is positive, then I think the market will brush it off, unless the number comes out above 3%.
It´s a bit tough to call a trade in GBP/USD because there are uncertainties surrounding the USD as well. However, I still favor the downside because the buyers seem too afraid to be able to take things too far.