The British pound advanced against the US dollar on Friday, climbing to the 1.2960-1.2970 range following stronger-than-expected UK retail sales data. Simultaneously, broad-based US dollar weakness contributed to the pair’s upward movement, as investor sentiment remained cautious.
Technical indicators suggest a bullish bias for GBP/USD, with the pair maintaining support above the 100-period Simple Moving Average (SMA) on the 4-hour chart. The Relative Strength Index (RSI) hovers slightly above 50, indicating a lack of bearish momentum for now.
- Support Levels:
- 1.2930 (20-day SMA)
- 1.2900 (lower limit of the ascending regression channel)
- 1.2800 (200-day SMA)
- Resistance Levels:
- 1.3000 (static level, psychological barrier)
- 1.3040 (mid-point of the ascending channel)
UK Retail Sales Exceed Expectations
The UK Office for National Statistics reported a 1% increase in retail sales for February, outperforming market expectations of a 0.3% decline. This figure follows January’s upwardly revised 1.4% gain (previously 1.7%). The better-than-expected sales data helped the British pound gain traction against the dollar, reflecting resilience in consumer spending.
However, despite the strong retail numbers, global risk sentiment remains fragile. US stock index futures showed losses between 0.2% and 0.4%, limiting the pound’s upside potential. Traders remain cautious amid economic uncertainty and geopolitical risks.
US Inflation Data in Focus
Later in the day, attention will turn to the US Bureau of Economic Analysis’ release of the Personal Consumption Expenditures (PCE) Price Index for February, the Federal Reserve’s preferred inflation measure. Forecasts suggest a 0.3% monthly increase in core PCE.
- A stronger-than-expected reading could bolster the US dollar, potentially pushing GBP/USD lower.
- A softer reading (0.1% or lower) could weaken the greenback, allowing the pound to extend gains beyond 1.2960.
Despite these potential catalysts, risk sentiment will play a crucial role in determining GBP/USD’s trajectory heading into the weekend. If investors maintain a risk-off stance, the pair’s gains may remain capped.