- British pound falls for the first time in the week, falls from weekly highs.
- Worse than expected, US economic data failed to boost sterling.
- Strong UK economic data failed to support the GBP.
- GBP/USD Technical Outlook: Failure at the 200 DMA opens the door for a drop towards the 100 DMA.
On Friday, a set of strong UK macroeconomic data failed to support the GBP, which struggled to hold on to 1.3700, falling during the American session. At the time of publication, the GBP/USD trades at 1.3670. It is worth noting that in the last hour, the US dollar index retraced the 95.00 level, rising 0.25% to 95.05, supported by the rise in the 10-year US Treasury yield to 1.75. %, up 3bp.
Market sentiment is bearish, as evidenced by most European stock indices trading lower, while US stock indices post losses between 0.05% and 0.73%. In the forex market, safe haven pairs such as the USD, JPY and CHF appreciate.
US retail sales and industrial production disappoint
Retail sales fell 1.9% in December, which came as a surprise as they were expected to remain unchanged from November. In turn, the November rise was revised from 0.3% to 0.2%. December was thus the worst month since February 2021 and cut a four-month streak with rises.
Retail sales excluding autos were down 2.3%, against expectations for a 0.2% rise. In November they had risen 0.1% (revised from 0.3%).
The sales of the retail control group did not escape the tone of the report and also showed an unexpected drop, in this case of 3.1%, when the market consensus was for a rise of 0.1%. In November, a reading of -0.1% had been recorded, which was revised to -0.5%.
In the overnight session for North American traders, the UK economic docket showed UK Gross Domestic Product in November rising 0.9%, the first time compared to pre-pandemic levels in February 202. Meanwhile , industrial production rose 1% in November compared to the October reading.
Regarding UK Covid-19 cases, the UK reported 99,652 new Covid-19 cases and 270 deaths, down from 335 reported on Thursday.
GBP/USD Price Forecast
The daily chart of GBP/USD shows the formation of an evening star candlestick pattern right at the confluence of the 200 DMA that could push GBP/USD towards the 100 DMA.
On the downside, first support would be the Jan 12 daily low at 1.3621. A break of the latter would expose the confluence of the Jan 11 daily low and the 100 DMA mentioned above at 1.3551. If that level gives way, GBP/USD could drop towards 1.3500.
Additional technical levels