The U.K. reported a surprise drop in retail sales!
Could this mean more downside for GBP/USD? Or will the upcoming PMI releases turn the tide?
Before moving on, ICYMI, yesterday’s watchlist looked at EUR/USD’s uptrend pullback ahead of the ECB statement. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
ECB hiked interest rates from 2.00% to 2.50% as expected
U.S. headline retail sales tumbled 0.6% m/m in Nov vs. projected 0.2% dip
U.S. core retail sales slipped 0.2% m/m in Nov vs. previous 1.2% gain
U.S. Dec Empire State manufacturing index fell from 4.5 to -11.2 vs. -1.1 estimate
ECB head Lagarde: Interest rates will still have to rise significantly at a steady pace
U.S. industrial production dipped 0.2% m/m in Nov vs. estimated 0.1% uptick
China to ramp up COVID controls in rural areas
Australian flash manufacturing PMI down from 51.3 to 50.4 in Dec
Australian flash services PMI fell from 47.6 to 46.9 in Dec
U.K. GfK consumer confidence index improved from -44 to -42 in Dec
U.K. retail sales slumped 0.4% m/m vs. projected 0.3% gain in Nov
U.K. flash manufacturing and services PMIs at 9:30 am GMT
U.S. flash manufacturing and services PMIs at 2:45 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! ? ?️
What to Watch: GBP/USD
All eyes and ears are on flash PMI readings in the next few hours!
Can these spur a continuation of the selloff on Cable?
The pair already broke below its short-term ascending trend line and might be in the middle of a pullback to the former support zone.
The Fibonacci retracement tool shows that this lines up with the 50% level near the 1.2300 major psychological mark and 100 SMA dynamic inflection point.
Problem is, the 100 SMA is still above the 200 SMA to indicate that the path of least resistance is to the upside. In other words, there’s a strong chance the rally might carry on!
Stochastic is also reflecting the presence of bullish vibes, as the oscillator has room to climb before reaching the overbought territory.
If the U.K. prints yet another set of improvements in its manufacturing and services PMI surveys, we might just see GBP/USD pop back up to the area of interest.
Then if Uncle Sam reports stronger than expected PMI figures, the pair could resume the slide back to the swing low near the 1.2150 mark or lower.
Better be quick on your feet if you’re trading the news!
