The Sterling traded well across the board, although gains were rather limited yesterday. The British currency gained the most against commodity-based currencies and the US Dollar, having edged 0.62% higher against the Loonie, 0.54% against the Aussie, 0.49% versus the Kiwi and 0.55% versus the American Dollar. At the same time, the GBP/CHF edged up 0.23%, while the EUR/GBP fell down only 0.11%. The Sterling also remained relatively unchanged against the Japanese Yen, having surged only 0.03%.
Britain's retail sales recorded their biggest monthly decrease in more than two years in March as Britons cut back on food and clothes in the latest sign households are nervous about the economic outlook. The Office for National Statistics said that the UK retail sales fell 1.3% in March compared with February, a much larger fall than expected. The volume of sales excluding auto fuel dropped 1.6% from February, the most since January 2014. The retail sales data is the latest in a series of disappointing data, coming after weak industrial production numbers and the first increase in unemployment in almost a year. Retail sales figures suggest that consumer spending, the driver of recent economic growth, weakened in March amid weak pay growth and a gloomier economic outlook.
The ONS also revealed that public-sector borrowing overshot official forecasts in the latest fiscal year and the national debt burden increased. A 4.8 billion-pound budget deficit in March left the full-year shortfall at 74 billion pounds, or 3.9% of gross domestic product. That compares with the 72.2 billion pounds projected by the Office for Budget Responsibility last month. The overshoot means George Osborne will have to find fresh savings in government spending, raise taxes or hope for quicker economic growth to reach his goal of balancing the government books by 2020.
US Durable and Core Durable Goods Orders, US Services PMI and US Consumer Confidence
GBP/USD on the edge of breaching the down-trend
On Monday Pound's volatility was contained by the 1.44 major level from the downside and the resistance trend-line from the upside, while the day ended with a 10-pip rally. Technical studies imply another GBP/USD surge today, but that would mean a breach of the nine-month down-trend earlier than initially anticipated. Furthermore, the down-trend is reinforced by the Bollinger band and the weekly R1, while the second target rests 1.4630, represented by the weekly R2 and the monthly R1. However, in case supply around the down-trend manages to cause the Cable to reverse its bullish momentum, the 100-day SMA is then expected to provide sufficient support at 1.4423.
Daily chart
Hourly chart
Sentiment at perfect equilibrium
Market sentiment is equally divided between bulls and bears, whereas the portion of sell orders edged down from 59 to 55%.
At OANDA market sentiment is close to the equilibrium, with only 54% of their open positions being long, two percentage points more from Monday. Meanwhile, the sentiment at SAXO Bank remains bearish, with 60% of their traders holding short positions (previously 59%).
Spreads (avg, pip) / Trading volume / Volatility
Majority sees GBP/USD above 1.44 in three months