Two trades to watch: GBP/USD, FTSE

GBP/USD rises after retail sales jump. FTSE rises after PBoC cuts rates.

Brexit 1



GBP/USD rises after retail sales jump

GBPUSD rise 1% yesterday on the weaker USD.

Weak US data fuelled fears of recession, cooling aggressive Fed bets.

Today the pound is rising after better-than-expected retail sales. Sales defied expectations of a -0.2% decline and jumped 1.4% MoM in April, up from -1.2% in March. Food store sales, alcohol, tobacco and sweet treats were behind the rise suggesting that households are staying in more to save as prices surge.

The rise in sales comes despite inflation rising to a 40-year high and consumer confidence tumbling to its lowest level since the 1970s.

Where next for GBPUSD?

After rebounding from the 2022 low of 1.2160, the pair recaptured the month-old falling trendline and is consolidating just below 1.25.

The rise over the 20 sma at 1.2440, combined with the bullish MACD keeps buyers hopeful of further upside. A rise above 1.25340 the weekly high could open the door to 1.2630 the May high, exposing the 50 sma at 1.2840.

Failure of the 20 sma support to hold could see the pair head towards 1.24 ahead of 1.2340

gbpusd chart

FTSE rises after PBoC cuts rates

The FTSE along with European bourses is rebounding helped higher by upbeat UK retail sales and news that the PBoC cut its 5-year loan lending rate by a record amount to support its slowing economy.

This was the second cut to the rate this year and is expected to boost the country’s housing market which has been hurt by COVID lockdowns.

COVID lockdowns in China mean that economic growth there could undershoot the US for the first time in over 45 years.

The move by the PBoC boosted Asian markets and lifted base metal prices, helping the heavyweight miners on the FTSE higher.

Where next for the FTSE?

The FTSE has rebounded from 7220, the rise higher has run into resistance at the 20 sma at 7410. The RSI is neutral, although the 20 sma has fallen below the 50 sna in a bearish signal.

Buyers need to push over the 20 sma to expose the 50 sma at 7475 and the mid-My high at 7530.

Failure to break above the 20 sma  could see sellers test support at 7300 the April low ahead of 7150 the May low.

ftse chart  

How to trade with City Index

You can trade with City Index by following these four easy steps:

  1. Open an account, or log in if you’re already a customer 

    Open an account in the UK
    Open an account in Australia
    Open an account in Singapore

  2. Search for the market you want to trade in our award-winning platform 
  3. Choose your position and size, and your stop and limit levels 
  4. Place the trade

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

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.

For further details see our full non-independent research disclaimer and quarterly summary.