U.K. retail sales are forecasted to have fallen 0.4% in February as mounting job losses and a deepening economic recession are expected to have led consumers to retrench. A negative reading would end three straight months of improving consumption which was derived from falling energy costs and retailers slashing prices.
Fundamental Outlook
U.K. retail sales are forecasted to have fallen 0.4% in February as mounting job losses and a deepening economic recession are expected to have led consumers to retrench. A negative reading would end three straight months of improving consumption which was derived from falling energy costs and retailers slashing prices. Last month’s surprising 2.5% increase was led by a 6.1% jump in apparel sales which saw prices cut by more than 4%. However, last month saw prices rise by 0.8% which could lead to a significant drop in the component and drag the headline number with it. A dour report would support the bearish technical outlook which is calling for a possible retrace to 1.4073. A drop in retail sales and the GBP/USD falling below 1.4500 could be seen as a trigger for a short position.
Technical Outlook
Near term, there may be 5 waves up from 1.3653. This leaves open the possibility of a correction back to at least 1.4390 and possibly Fibonacci support in the 1.4073-1.4206 zone. Staying below 1.4665 keeps the near term trend down.
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To discuss this report contact John Rivera, Currency Analyst: jrivera@fxcm.com
