Gbp rises as UK retail sales increase, impacting GBPUSD trajectory

GBPUSD Analysis

Performance after Tuesday
Period	Pct	Chg	Momentum
Tuesday	0.04%	5.7 Pips
Week to-date	-2.13%	-284.6 Pips
October	-2.07%	-277.4 Pips

Upcoming key events (London Time)

Wed 07:00 PM USD FOMC Meeting Minutes
Thu 01:30 PM USD CPI Inflation Rate (12-mth)

What happened lately

In the United Kingdom, the British Retail Consortium (BRC) reported a significant rise in the Like-For-Like Retail Sales for the month of September. Retail sales increased by 1.7% over a 12-month period, a notable improvement from the 0.8% recorded in August. This indicates a positive shift in consumer spending within the U.K., suggesting that consumers are slightly more optimistic about the economy and are willing to spend more. The increase in retail sales can be attributed to various factors, possibly including seasonal retail events, easing inflationary pressures, or an improved labor market.

As for the impact on GBPUSD, the pair saw a modest increase of 0.04%, with the exchange rate reaching 1.31000. The improvement in retail sales data in the U.K. adds to the positive sentiment towards the British Pound, as stronger consumer spending could potentially lead to economic growth and, by extension, may influence the monetary policy decisions of the Bank of England. However, the movements in GBPUSD are not only influenced by events in the U.K. but also heavily depend on U.S. economic data and Federal Reserve policies.

Looking ahead, upcoming U.S. economic events could play a crucial role in shaping the GBPUSD trajectory. The Federal Open Market Committee (FOMC) Meeting Minutes are due to be released, followed by the Consumer Price Index (CPI) Inflation Rate announcement. Both these events are of high significance and could bring volatility to the market. If the U.S. data highlights stronger economic activity, it could bolster the U.S. Dollar against the Pound, potentially offsetting any gains made by the positive U.K. retail data. Conversely, if the U.S. data shows a cooling down, it may empower the Pound further, strengthening GBPUSD.

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What can we expect from GBPUSD today?

GBPUSD on Tuesday rose 0.04% to 1.31000. Price is below 9-Day EMA while Stochastic is falling.

Updated daily direction for GBPUSD looks bullish as the pair ended higher after Tuesday trading session.

Looking ahead for the day, immediate upside resistance level is R1 at 1.31209 with break above could target R2 at 1.31418 or figure level area. While towards the downside, we are looking at daily low of 1.30639 as an important support. Break below this level could weaken the current bullish momentum. A break above 1.31133 may suggest continuation after recent positive movement.

For the week to-date, take note that GBPUSD is bearish as the pair posted lower by -2.13%.

Key levels to watch out:

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