GBP/USD sell-off positive factors steam after weak UK retail gross sales knowledge

The GBP/USD value tumbled for the second straight day as flash financial numbers pointed to a slowing financial system because the variety of Covid circumstances rises. The pair declined to 1.3615, which was the bottom degree since July twenty first. 

UK retail gross sales disappoint

The retail sector is a key part of the UK financial system. In addition to, it is likely one of the largest employers within the nation. The sector can also be an vital indicator of shopper spending, which is the most important constituent of the financial system. 

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After staging a powerful comeback a number of months in the past, UK retail gross sales tumbled in July because the nation handled the present Delta variant wave. 

In keeping with the Workplace of Nationwide Statistics (ONS), the headline retail gross sales declined by 2.5% on a month-on-month foundation in July. This pattern translated to an annualised improve of two.4%, which was considerably decrease than June’s improve of 9.2%.

In the meantime, core retail gross sales, which excludes the volatile food and energy prices, declined by 2.4% in July after rising by 0.3% in June. They rose by 1.8% on a year-on-year foundation, which was decrease than the earlier 6.8%. 

These numbers got here two days after the ONS revealed comparatively weak UK shopper value index (CPI) knowledge. The numbers confirmed that the headline CPI declined from 2.5% in June to 2.0% in July. This decline was considerably steeper than the median estimate of two.3%. The core CPI additionally declined sooner than anticipated.

The continued developments in inflation will probably stay contemplating that commodity costs have retreated not too long ago. Crude oil has dropped from the year-to-date excessive of greater than $76 to $66 whereas the West Texas Intermediate (WTI) has declined to $64. Different commodity costs like copper and iron ore have additionally tumbled.

GBP/USD prediction

On the 1D chart, we see that the GBP/USD pair has been in a steep downward pattern prior to now few days. It’s about 4.6% under the best level this yr. It has additionally declined under the 25-day and 50-day exponential shifting averages (EMA) whereas the MACD has moved under the impartial degree. The value can also be barely under the Ichimoku cloud. 

Subsequently, the pair will probably proceed the downward pattern as bears goal the important thing help degree at 1.3500. On the flip aspect, a transfer above the resistance at 1.3750 will invalidate this view.