Pound Dips On Retail Sales

The British pound has posted slight losses in the Friday session. Currently, GBP/USD is trading at 1.2280. On the release front, British Retail Sales declined 1.9%, well below the forecast of -0.1%. In the US, FOMC member Patrick Harker will deliver a speech. It’s inauguration day in the US, so the markets will be listening closely as President Trump addresses the American people.

British retail sales were down sharply in December, but the soft reading has not had a dramatic effect on the pound. The currency, which has been hammered since the Brexit vote in June, has shown signs of recovery and is poised to have a winning week for the first time in 2017. The currency jumped 2.9 percent on Tuesday, after Prime Minister Theresa May’s speech on Brexit. May has had little to say about Brexit in recent months, but that policy appears to have changed, as she stated that Britain would quit the European common market but was open to free trade agreements with Europe and countries across the world. May wants to start negotiations on Britain’s departure from the EU in March, and has said that the negotiations should take two years to complete.

All eyes are on Washington, D.C., as Donald Trump will be sworn in as the 45th president. Trump’s stunning victory in November has triggered strong gains for the US dollar and the stock market, and there is no arguing that the US economy is robust. Nonetheless, there is a feeling of unease in the air, as confidence and hope are starting to give way to confusion and uncertainty, as Trump has failed to outline any specifics on his economic policies, while continuing to tangle with the media and fire off controversial Twitter messages. How will the dollar react when Trump rolls up his sleeves and begins work on Monday morning? Earlier on Friday, Oanda’s Stephen Innes provided the following assessment:

the downside risk for the USD remains elevated more so from Trump’s inauguration if he fails to underscore economic policy. On the other hand, if Donald comes out firing on all fiscal stimulus cylinders, bond yield will surge, and the greenback would catch an enormous updraft… the President–elect takes centre stage as we begin a new chapter in American politics and global financial markets. Buckle up; we are likely in for a wild ride in the coming 100 days

GBP/USD Fundamentals

Friday (January 20)

  • 4:30 British Retail Sales. Estimate -0.1%. Actual -1.9%
  • Tentative – President Trump Speech
  • 9:00 US FOMC Member Patrick Harker Speech

*All release times are EST

* Key events are in bold

GBP/USD for Friday, January 20, 2017

GBP/USD

GBP/USD January 20 at 9:00 EST

Open: 1.2336 High: 1.2372 Low: 1.2259 Close: 1.2279

GBP/USD Technicals

S1S2S1R1R2R31.19431.21111.22721.23511.24711.2579
  • GBP/USD edged higher in the Asian session but has reversed directions and posted losses in European trade
  • 1.2272 was tested earlier in support and is a weak line
  • 1.2351 is the next resistance line

Further levels in both directions:

  • Below: 1.2272, 1.2111, 1.1943 and 1.1844
  • Above: 1.2351, 1.2471 and 1.2579
  • Current range: 1.2272 to 1.2351

OANDA’s Open Positions Ratio

GBP/USD ratio is unchanged in the Friday session. Currently, long positions command a majority (62%), indicative of trader bias towards GBP/USD reversing directions and moving upwards.

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