Barber Shop, Wanstead. Image source: Simon, flickr.com
The latest retail sales in Britain beat the market forecasts, momentarily bolstering the pound in the early hours of today's trading session. However, the sterling's bullish sentiment appears to be broadly declining on charts with a bigger timeframe. This is examined in detail in our newest comprehensive analysis of the GBPUSD pair.
Earlier today, the Office for National Statistics in Britain posted the latest retail sales numbers. According to the findings of the report, consumption in the UK rose for the first time in six months, beating the preliminary forecasts. Meanwhile, the newest bullish pullback on the GBPJPY pair appears to be consolidating ahead of a very probable dropdown.
GBPJPY 4H Price Chart. Image source: Trendsharks ©, created with TradingView.com
As can be seen on the 4H chart above, the GBPJPY started developing a new downtrend, illustrated by the declining channel. It was temporarily suspended at the 61.8 per cent Fibonacci retracement level at 152.564. The subsequent pullback, in turn, was denied below the 38.2 per cent Fibonacci at 154.737.
Not only that but the peak of the pullback was also denied by the upper limit of the channel and the crossover between the 100-day MA (in blue) and the 200-day MA (in orange), confirming that the pullback is probably being terminated at present.
At the same time, the convergence between the 12-day EMA and 26-day EMA on the MACD indicator underscore waning bullish momentum, which is congruent with the expectations for a bearish reversal.
The reversal is likely to emerge from the area spanning between the 38.2 per cent Fibonacci, which is currently converging with the 200-day MA, and the major resistance level at 154.230, underpinned by the 100-day MA. The subsequent dropdown would likely test the 61.8 per cent Fibonacci for a second time.
Expanding consumption in the UK, driven by growing global demand
UK MoM Retail Sales. Image source: TradingEconomics.com
It was revealed that retail sales in the UK increased by 0.8 per cent in October, marking the first monthly gain in six months. The better-than-expected performance was inlined with the robust consumption numbers that were recorded in the U.S. over the same period, underpinning a global trend.
The robust employment data in October also demonstrated the accelerating pace of economic stabilisation in Britain.
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