GBP/USD slides on negative UK retail sales, low US unemployment claims
James Chen July 23, 2015 8:17 PM
<p>GBP/USD (daily chart shown below) slid early on Thursday after data releases in the UK and US pressured the pound and prompted another surge in […]</p>
GBP/USD (daily chart shown below) slid early on Thursday after data releases in the UK and US pressured the pound and prompted another surge in the dollar. Thursday’s GBP/USD drop gave back much of the gains made initially on Wednesday that were triggered by the Bank of England releasing its Monetary Policy Committee minutes.
Retail sales data from the UK on Thursday showed an unexpected decline in June of 0.2% from May. Analysts had expected a 0.4% increase. In addition, unemployment claims in the US were also released on Thursday, showing a plunge in jobless claims to 255K last week, the lowest in four decades. Analysts had been expecting 279K claims.
This combination of vital economic data from both countries drove the GBP/USD back down to its 50-day moving average and the lows of the tight trading range that has been in place for the past week. The drop has also brought the currency pair closer to its key 1.5500 psychological support level.
The current range-bound price action has been the result of shifting speculation regarding both UK and US interest rate hikes. Both the Bank of England and the Fed have signaled intentions to raise rates, but the timing of such hikes have been uncertain.
As it currently stands, GBP/USD continues to trade within a moderately bearish range. With any breakdown below the noted 1.5500 psychological support level, the currency pair could drop back down towards its 200-day moving average, where a one-month low was established just two weeks ago. Below the 200-day average is a major downside support target at 1.5200, which is the area of the early June lows.
To the upside, short-term resistance within the context of the current trading range remains around the 1.5675 level.
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.