GBP/USD – British Pound Softens as Retail Sales Slide

The British pound has lost ground in the Wednesday session, continuing the downward movement seen on Tuesday. In North American trade, GBP/USD is trading at 1.4103, down 0.39% on the day. On the release front, the CBI Realized Sales survey came in at -8, well off the estimate of +7 points. Later in the day, the UK releases GfK Consumer Confidence, with the markets braced for a second consecutive drop of -10 points. Over in the US, Final GDP impressed with a gain of 2.9%, beating the estimate of 2.7%. There was more good news as Pending Home Sales jumped 3.1%, rebounding after the previous release of -4.7%. Later in the day, Japan releases Retail Sales, which is expected to edge up to 1.7%. Thursday promises to be busy on both sides of the pond. The UK releases Current Account and Final GDP, while the US will publish unemployment claims and UoM Consumer Sentiment.

The British economy has performed better than most had expected, with the uncertainty over Britain’s departure from the European Union in March 2019. However, indicators released on Wednesday pointed to some glaring weaknesses in the British economy. The CBI Retail Sales survey has showed sales volumes softening in recent months, and this troubling trend continued in March, with a reading of -8 points. Consumer confidence is also waning, as GfK Consumer Confidence has posted consecutive declines since April 2016. Still, the British pound has enjoyed a solid March, with gains of 2.6% against the US dollar.

The tariff spat between the US and China has shaken up global stock markets and also caused volatility in the currency markets. US President Trump slapped tariffs on Chinese products last week, and China has vowed to retaliate with tariffs on US products. The specter of a global trade war ahs soured investor risk appetite. This week, however, China was singing a more conciliatory tune, saying it would apply to the World Trade Organization to overturn the tariffs. The US has imposed the tariffs under a national security provision, but China has argued that the move is a trade barrier with the intent of protecting domestic producers. Although the dispute has not been resolved, the Chinese move has eased tensions and restored investor risk appetite, in the hope that both the US and China will climb down from their trees and reach some agreement instead of imposing tariffs on each other.

GBP/USD Fundamentals

 Wednesday (March 28)

• 6:00 British CBI Realized Sales. Estimate +7. Actual -8
• 8:30 US Final GDP. Estimate 2.7%
• 8:30 US Final GDP Price Index. Estimate 2.3%
• 8:30 US Goods Trade Balance. Estimate -74.1B
• 8:30 US Preliminary Wholesale Inventories. Estimate 0.6%
• 10:00 US Pending Home Sales. Estimate 2.1%
• 10:30 US Crude Oil Inventories. Estimate 0.5M. Actual 1.6%
• 12:00 US FOMC Member Raphael Bostic Speaks
• 19:01 British GfK Consumer Confidence. Estimate -10

 Thursday (March 29)

• 4:30 British Current Account. Estimate -24.0B
• 4:30 British Final GDP. Estimate 0.4%
• 4:30 British Net Lending to Individuals. Estimate 4.8B
• 8:30 US Core PCE Price Index. Estimate 0.2%
• 8:30 US Personal Spending. Estimate 0.2%
• 8:30 US Unemployment Claims. Estimate 230K
• 9:45 US Chicago PMI. Estimate 62.1
• 10:00 US Revised UoM Consumer Sentiment. Estimate 101.9

*All release times are GMT

*Key events are in bold

GBP/USD for Wednesday, March 28, 2018

GBP/USD March 28 at 11:35 EDT

Open: 1.4158 High: 1.4201 Low: 1.4091 Close: 1.4103

GBP/USD Technical

GBP/USD posted gains in the Asian session but retracted these gains in European trade. The pair continues to head lower in the North American session

• 1.4010 is providing support
• 1.4128 has switched to a resistance role after losses by GBP/USD on Wednesday. It is a weak line
• Current range: 1.4010 to 1.4128

Further levels in both directions:

• Below: 1.4010, 1.3901 and 1.3793
• Above: 1.4128, 1.4227, 1.4345 and 1.4452

OANDA’s Open Positions Ratio

GBP/USD ratio is showing gains towards short positions. Currently, short positions have a majority (57%), indicative of trader bias towards GBP/USD continuing to move downwards.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.