London UK, November 12 2020. Image source: Richard Martin Lee © 123RF.com
The Office For National Statistics in the UK published the observed retail sales data for October earlier today. According to the findings of the report, the recorded performance of 1.2 per cent growth exceeded the expectations of the initial market forecasts, which were projecting a depreciation by 0.3 per cent.
Customer spending thus remained virtually unchanged from a month prior when the British economy recorded a 1.4 per cent expansion of retail sales. Moreover, in addition to beating the initial forecasts, the British economy enjoyed its sixth consecutive month of growing retail sales.
UK Retail Sales. Image source: TradingEconomics.com
The welcoming news represents yet another boost for the British pound, which has been strengthening for a while. Unlike the greenback, the pound was affected positively by the recent vaccine news, as such a potential game-changer in the fight against the coronavirus eased the global demand for safe-haven assets.
As can be seen on the 4H chart below, the pound continues to be gaining ground against the euro as well. The EURGBP pair has been depreciating within the boundaries of a descending channel since late-October, and there are no signs of slowing down.
At present, the price action of the pair is consolidating just below the major support level (currently acting as resistance) at 0.89600, following a recent breakdown of significant importance.
With no imminent signs of reversal, the pair is likely to resume falling in the near future. There are several key developments that confirm these projections. Firstly, the 100-day MA (in blue) has been threading alongside the upper boundary of the channel for quite a while now, which underpins the significant bearish bias.
Secondly, the price action is currently concentrated below the 20-day MA (in red) as well, which implies the existence of strong bearish pressure in the short-term too. Finally, the recent bearish crossover on the MACD indicator demonstrates that the underlying market momentum is also favouring the bears at present.
The EURGBP is likely to find support near the most recent swing low – around 0.88800 – which is currently coinciding with the lower boundary of the descending channel.
EURGBP 4H Price Chart. Image source: Trendsharks ©, created with TradingView.com
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