Awaiting UK Retail Sales Data: GBP/USD Fluctuates and Market Participants Seek Direction

The GBP/USD pair persistently fluctuates within a narrow margin around 1.2440 during the Tokyo trading session. The Cable is having difficulty making a decisive move as market participants await the release of the United Kingdom Retail Sales data for further direction.S&P500 futures have exhibited a relatively flat yet positive performance in the Asian session. US equities experienced a downturn on Thursday due to mixed earnings from the banking sector and disappointing revenue guidance from Tesla. Despite the overall risk-averse market sentiment, stock-specific activity remains highly dynamic.

This quarter’s US banking sector earnings have been inconsistent, with JP Morgan Chase and Morgan Stanley surpassing Wall Street estimates, while Goldman Sachs posted disappointing figures. Nonetheless, this suggests the overall US banking system remains robust.

The US Dollar Index (DXY) is displaying a subdued performance around 101.80, with attention now turning to the Federal Reserve (Fed)’s monetary policy meeting scheduled for the first week of May. Fed chair Jerome Powell is expected to implement another 25 basis point (bps) rate hike as US inflation deviates significantly from target levels.

Cleveland Federal Reserve President Loretta Mester emphasized on Thursday that the Fed still needs to address persistently high inflation in the US, according to Reuters. She added that the “Fed will need to hike the policy rate to over 5% and hold there for a while.”

As for the Pound Sterling, investors are shifting their focus to Retail Sales data following higher-than-expected inflation figures and labor cost index data. Estimates indicate that UK Retail Sales contracted by 0.5% in March, compared to a 1.2% expansion in February. The annual Retail Sales contraction rate is also expected to decrease to 3.1% from the previous 3.5%.

GBP/USD Technical Outlook

The GBP/USD pair consistently oscillates around the EMA50, influenced by the negative stochastic signals that impede its upward momentum. The pair awaits a buildup of positive momentum to propel the price towards resuming the bullish trend, targeting 1.2500 and subsequently 1.2545 as the next key levels.

As a result, we maintain our bullish outlook for the near term, unless the pair breaches the 1.2370 level and sustains a daily close below it. For today, the projected trading range lies between a 1.2350 support level and a 1.2530 resistance level.

ABOUT THE AUTHOR See More

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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