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UK Retail Sales miss but December holds up

Market Analysis

GBPUSD, Daily              

Sterling shed about 30 pips versus the dollar and euro following the unexpected 1.9% m/m dive in retail sales, the biggest fall since 2011 and which came contrary to the median forecast for a 0.2% rise. This is a market mover as the consumer sector has been the driver of economic growth in the UK, and signs of weakness chimes with a declining pace of real income growth as rising inflation impacts. Cable has settled around 1.2290 versus pre-data levels above 1.2330. The pair remains sandwiched between its 20- and 50-day moving averages, at 1.2244 and 1.2399, respectively, both of which have a level profile, indicating a broadly directionless trend. Wednesday’s and Thursday’s lows at 1.2253 and 1.2257, ahead of the 20-day moving average at 1.2244, now mark a key near-term support zone. The risk remains for a return to sub-1.2000 levels on the back of Brexit concerns and expectations of a protracted Fed tightening cycle.

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Meanwhile, GBPJPY also looks interesting as it breaks above the 200 DMA 141.00 and tries to break the 50 and 20 DMA area at 142.15. This could see a return to the 144.50 –145.50 zone. The Parabolic SAR has turned positive this week and the RSI remains neutral.  One to watch over the next few trading days.

 

 

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Stuart Cowell

Market Analyst

HotForex

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