- During the continued decline of the US dollar, there was a good opportunity for the GBP/USD pair to move upwards towards the 1.2435 resistance level.
- This is the highest for the currency pair in months, and closed the week's trading, stable around 1.2396.
- By the end of last week's trading, the exchange rates of the pound sterling fell widely, after the Office for National Statistics (ONS) said that British retail sales volumes fell by 1 percent in December, which makes retail sales decline for the eighth time in a row in December.
The one percent decrease in the number of items sold by retailers throughout the Christmas month adds to a -0.5 percent decline from November and leaves sales volume 1.7 percent below the pre-coronavirus level as of February 2020. Demand has fallen further for retailers. in non-food stores. For its part, the Office for National Statistics says: “Food store sales volumes fell by 0.3% in December 2022 from a rise of 1.0% in November, with comments from some retailers indicating that customers stocked up early for Christmas.” And the report adds: “Between 2021 and 2022, the volume of retail sales decreased by 3.0%, as the lifting of restrictions imposed on hospitality led to a return to dining outside the home, and the increase in prices and the cost of living affected sales volume.”
November's Black Friday sales are often cited as having not picked up retail sales during the holiday month since December 2014, although this year's November sales volumes were also lower in a result widely attributed to the current high level of inflation. December was also marred by nationwide disruptions to postal and rail services due to industrial strikes, which many cited for affecting sales.
The GBP exchange rates fell broadly in response to the release despite the relatively high levels and at the end of the week the GBP remained one of the best performing currencies in both the G10 and G20 groups.
Previously, data released on Wednesday indicated that British inflation slowed last month, but also indicated that companies producing services were still paying through large price increases despite the sharp rise in the bank rate since the late 1980s. Wage growth has also accelerated in some pockets of the labor force in recent months, according to data proposed on Tuesday, while before that GDP numbers suggested the British economy did not deteriorate in November to the extent forecasters at the Bank of England and elsewhere had envisioned.
Technical outlook for the GBP/USD pair:
In the near term and according to the performance of the hourly chart, it appears that the GBP/USD currency pair is trading within a neutral channel formation. This indicates that there is no clear directional bias in market sentiment. Therefore, the bulls will target potential channel breakout profits at around 1.2436 or higher at the resistance 1.2491 and on the other hand, the bears will target the potential channel breakout profits at around 1.2336 or lower at the support 1.2283.
On the long run, and according to the performance on the daily chart, it appears that the GBP/USD is trading within a bullish channel formation. This indicates a significant bullish momentum in the long-term market sentiment. Therefore, the bulls will be looking to extend the current series of gains towards 1.2598 or higher to the resistance 1.2845. On the other hand, the bears will target long-term profits at around 1.2180 or below at the support at 1.1924.
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