GBP/USD edges higher after strong Retail Sales

Just released from UK, June retail sales numbers came in much higher than expected, growing 0.9% mom and 3.7%
YOY versus expectation of 0.4% mom and 2.9% YOY. May data was also revised up. Cable edged higher after such news but lacks decisive upside momentum to rise further yet.

While Bernanke will continues his two days testimony, Fed will also release minutes for Jun meeting today. We don’t expect the minutes to deviate from what Bernanke has said yesterday. That is, core inflation will like to fall in the next quarters as growth moderates. And, “the extent and timing of any additional firming that may be needed to address inflation risks will depend on the evolution of the outlook for both inflation and economic growth.” On the data front, jobless claim is expected fall slightly from 332k to 320k. Philly fed index is expected to drop from 13.1 to 12.3 in July.

Earlier today, BoJ meeting minutes revealed that while the call vote for overnight all rate to by 25bp to 0.25% is unanimous at 9-0, there were some debates on raising official discount rate from 0.1% to 0.4%. No further rate hikes is planned and tightening will still be slow. Yen was steady after the release.


Daily Pivots: (S1) 1.8284; (P) 1.8361; (R1) 1.8495

Cable’s rise from 1.8174 has resumed as high as 1.8476 so far, meeting 1.8466 resistance as expected. At this point, as long as cable stays above 1.8412 minor support, further rally is still in favor towards 1.8558 cluster resistance (50% retracement of 1.9024 to 1.8090 at 1.8557). Touching of 1.8412 will indicate an intraday top is formed and risk pull back to 4 hours 55 EMA (now at 1.8346).

As discussed before, the price actions from 1.8090 are still being treated as consolidation to fall from 1.9024 only. Hence, Hence, as long as cable’s rebound from 1.8174 is limited by 1.8558 cluster resistance, we’ll continue to look for topping signals and expect fall from 1.9024 to resume. Break of 1.8174 will suggest such decline from 1.9024 has resumed for 1.8090 low first and then 1.7935 cluster support (61.8% retracement of 1.7230 to 1.9024 at 1.7915).

However, regardless of interpretation of the larger trend, a break above 1.8558 will indicate a strong rally is underway for 100% projection of 1.8090 to 1.8538 from 1.8174 at 1.8622.

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Shing-Ip Tsui (Shing) is the founder and CEO of ActionForex is set up with the aim to empower individual forex traders by providing insightful contents. Analysis reports, live pivot points on majors and crosses, etc are provided with collection of carefully selected educational articles and free trading ebook downloads.