UK retail sales forecast to slow
GBP/USD => The pound rises above 1.32
Oil => The commodity falls for a second day
EUR/USD => The pair rises above 1.10
Will UK retail sales drag on GBP?
GBP/USD is advancing after 2 days of decline. The pair lost -0.15% yesterday after mixed PMI data. The service sector saw growth unexpectedly accelerate in March and the PMI reached its highest level in 9 months. However, the manufacturing sector saw growth slow by more than forecast, and the PMI fell to a 5-month low. Meanwhile, the US dollar was lifted by more hawkish Fed speakers. Today, attention turns to UK retail sales which are expected to show a slight slowdown in February compared to January, as inflation hit 6.2% and the squeeze on household incomes could show through. Weak retail sales data could drag on the pound.
|UK. Composite PMI
UK Retail sales Feb. MoM
|Actual: 59.7 (0.2)
Expected: 0.8% (0.9%)
Where next for GBP/USD?
GBP/USD has been trending lower forming a series of lower lows and lower highs. The pair rebounded off a floor of 1.30 the 2022 low re-taking a key resistance at 1.3180 the December low, which now acts as near-term support. The 50 sma is set to cross below the 100 sma in a bearish signal. Sellers will need to break below 1.3180 in order to bring 1.3080 the March 7 low into play and them 1.30. Buyers may look to the bullish crossover on the MACD for optimism of further upside. A break above 1.33 could expose the 50 & 100 sma at 1.3390.
Oil falls as supply fears ease
Oil prices are edging lower for a second straight day on Friday, after falling 2.2% in the previous session. Even so, oil is still set to book gains of around 7% across the week, after losing 9% across the previous two weeks – volatility in oil is showing few signs of easing. Today oil fell yesterday and remains under pressure today as the EU remains split over imposing an oil embargo on Russian oil and after the US and allied considered releasing more oil from reserves. Global supplies are at the lowest level in 8 years and continue to be eroded. Looking ahead, US rig count data is due.
EUR/USD rises ahead of EU Summit, German data
EUR/USD is advancing after 2 days of losses. The pair fell versus the strong US dollar yesterday after US business activity data showed that growth accelerated in both the manufacturing and service sector in March. The composite PMI rose to an 8-month high boosted by strong demand, although Russia’s war has hurt sentiment. More hawkish Fed speakers also lifted the USD. European PMIs came in better than forecast but showed that activity was slowing. Today, the USD is edging lower and attention turns to the EU leaders summit, where Ukraine will top the agenda and German IFO business climate data. Expectations are for sentiment to fall.
|US Composite PMI March
EZ Composite PMI March
Ger. IFO Business Climate
|Actual: 58.5 (2.6)
Actual: 54.5 (1)
Expected: 94 (4.6)
Support can be found at 1.10 (round number) and 1.0950 (falling trendline support).
Resistance for the pair can be seen at 1.1110 (March 18 high) and 1.1140 (March 17 high)
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