GBP/USD: British pound steady after strong UK retail sales in October
- The GBP/USD price is rising today after the ONS released strong UK retail sales numbers.
- The overall sales rose by an annualised rate of 5.8%%, the sixth consecutive months of gains.
- The data came two days after the bureau released strong inflation data.
The British pound is heading for the third consecutive weekly gains after the latest UK retail sales numbers and the latest news on Brexit. The GBP/USD pair is trading at 1.3262, which is 4.65% higher than the September low of 1.2674.
UK retail sales eased in October
In October, the number of new Covid cases in the United Kingdom started to creep up leading to new mild restrictions by the Boris Johnson administration.
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As a result, the country’s retail sales rose by 1.2% in October, a smaller increase compared to the previous month’s increase of 1.4%. On an annualised basis, the overall sales increased by 5.8%, which was also better than the September’s increase of 4.6%. The total sales have been rising for the past six consecutive months after they fell by 18.1% in April.
Core retail sales, which does not include the volatile food and energy, rose by 1.3%, a lower increase than September’s 1.5%. That led to a year-on-year increase of 7.8%, also higher than the previous month’s 6.4%. Forex investors were expecting the general and core sales to rise by 4.2% and 5.9%, respectively.
These numbers came two days after the Office of National Statistics (ONS) released the October inflation data. The numbers showed that the overall prices rose by 0.7% in October, a slight increase from the previous month’s 0.5%. This increase was mostly because of a 2.8% increase in clothing, food, and furnishings. In a statement after the CPI data, an analyst at Deloitte said:
“October’s inflation figures have come in slightly above expectations. Yet they reflect a disinflationary environment, given the current backdrop of weak wage growth, rising unemployment and abundant spare capacity.”
Meanwhile, the GBP/USD is also reacting to Brexit issues as the deadline to December nears. Yesterday, talks between Michel Barnier and David Frost, the two lead negotiators, were postponed after a participant tested positive for the virus. The two pledged to continue talking. However, according to The Times, Barnier will tell EU leaders that talks are still deadlocked over fishing issues and level playing field rules.
GBP/USD technical analysis
On the daily chart, the GBP/USD has been rising steadily in the past few months mostly because of a weaker US dollar. Since September, the pair has risen from 1.2672 to a high of 1.3310. The price remains above the two ascending trendlines shown in black.
It is also about 1.40% below the important resistance level of 1.3475. Therefore, in the near term, the pair will likely continue rising as bulls aim for the next resistance at 1.3475. You can use this guide to learn how to read forex charts.
For this prediction, the invalidation point or the ideal place to put a stop loss is 1.3195, which is an important psychological level.