GBP/USD – Pound slightly higher on strong UK retail sales

The British pound has posted slight gains in the Thursday session. In North American trade, the pair is trading at 1.2708, up 0.08% on the day. On the release front, British retail sales rebounded with a gain of 0.7%, beating the estimate of 0.2%. It was a busy day for U.S indicators. Building Permits improved to 1.31 million, matching the estimate. Housing starts remained at 1.17 million, short of the estimate of 1.27 million. On the manufacturing front, the Philly Manufacturing Index dropped sharply to 11.9, missing the estimate of 21.9 points. Unemployment claims edged down to 212 thousand, shy of the estimate of 215 thousand. On Friday, the U.S releases Preliminary UoM Consumer Sentiment. 

British retail sales posted a respectable o.7% gain in July, following a decline of 0.5% in June. The turnaround has been attributed to the hot summer weather as well as a strong showing by the British soccer team at the World Cup in July. This is suggestive of improved growth in the third quarter.

The pound has endured a dismal August, losing 3.7 percent in that time. Global trade tensions with the U.S have weighed on risk appetite, and the dollar has strengthened against the pound and other major currencies. On Wednesday, the pound dipped below the 1.27 line for the first time since June 2017. However, reports that the U.S and China will be holding trade talks later in August have revived hopes of an end to the global trade war and could boost the pound against the dollar. The negotiations between the U.S and China will be handled by low-level officials and are being billed as ‘talks about talks’. Still, the markets are hopeful that the two sides are talking rather than slapping tariffs against each other.

GBP/USD Fundamentals

Thursday (August 16)

• 4:30 British Retail Sales. Estimate 0.2%. Actual 0.7%
• 8:30 US Building Permits. Estimate 1.31M. Actual 1.31M
• 8:30 US Housing Starts. Estimate 1.27M. Actual 1.17M
• 8:30 US Philly Fed Manufacturing Index. Estimate 21.9. Actual 11.9
• 8:30 US Unemployment Claims. Estimate 215K. Actual 212K
• 9:30 British CB Leading Index. Actual -0.2%
• 10:30 US Natural Gas Storage. Estimate 30B. Actual 33B

Friday (August 17)

• 10:00 US Preliminary UoM Consumer Sentiment. Estimate 98.1

*All release times are DST

*Key events are in bold

GBP/USD for Thursday, August 16, 2018

GBP/USD August 16 at 13:20 DST

Open: 1.2698 High: 1.2754 Low: 1.2686 Close: 1.2708

GBP/USD Technical

GBP/USD ticked higher in the Asian session but gave up these gains in European trade. The pair has edged higher in North American trade

• 1.2706 was tested earlier in support. It remains a weak line
• 1.2852 is the next resistance line
• Current range: 1.2706 to 1.2852

Further levels in both directions:

• Below: 1.2706, 1.2589 and 1.2366
• Above: 1.2852, 1.2996 and 1.3088

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