GBP/USD Bears Retain Control After Weak UK Retail Sales

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The GBP/USD currency pair on Friday continued to trend downwards below the 1.2200 level following the latest round of UK retail sales data. The currency pair has been on a downward movement since flattening towards the end of last month. 

The pair has now dropped below the 100-hour and the 200-hour moving average lines in the 60-min chart. The downward movement has also pushed it closer to the oversold levels of the 14-hour RSI.

GBP/USD Fundamentals Overview

From a fundamental perspective, the GBP/USD currency pair is trading at the back of a relatively busy period in the market. In the UK, claimant count change for April came in at 856.5k up from 12.1k in March. The market was expecting a claimant count change of 150k. However, the ILO unemployment rate for the three months ended March 30, edged lower to 3.9% down from 4.0% in the previous month. This was also better than the expected rate of 4.4%. 

On Wednesday, the UK CPI for April missed the (YoY) expectation of 0.9% with 0.8%. On Thursday, the Markit Services and Manufacturing PMIs outperformed expectations. However, on Friday, retail sales data came in weaker than expected. Retail Sales ex-fuel missed the (MoM) and (YoY) expectations of -15% and -18.2% with -15.2% and -18.4% respectively. General retail sales also disappointed with a (YoY) and (MoM) change of -22.6% and -18.1%, respectively versus expectations of -18.2% and -16%.

GBP/USD Technical Analysis (the 60-min Chart)

Technically, the GBP/USD currency pair appears to be trading within a consolidative descending wedge in the 60-min chart. This indicates a relatively short-term bearish bias in the market sentiment.

The bears will be looking to extend the current downward movement towards 1.2085 or lower at 1.1996. On the other hand, the bulls will look to initiate a short-term rebound by targeting profits at around 1.2295 or higher at 1.2405.

GBP/USD Technical Analysis (the Daily Chart)

In the daily chart, the GBP/USD currency pair appears to be trading within a highly volatile sideways channel. This indicates a strong tussle between the bulls and the bears. The pair is now trading closer to the support section at 1.2168.

The bulls will be targeting long-term rebound profits at around 1.2487 or higher at 1.2752. On the other hand, the bears will look to pounce for profits at around 1.1957 or lower at 1.1655.

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