Weaker US retail sales and stronger UK CPI

Retail sales in the US are weak and the UK CPI stronger, but the focus is on the FOMC

November retail sales were 0.3% M / M for November versus an expectation of 0.9% M / M, well below the October impression of 1.8% M / M. Non-auto retail sales were also 0.3% M / M against an expectation of 0.7% M / M and a reading of 1.8% M / M in October. Could it be that the highest level of inflation in 40 years has finally caught up with American consumers? Remember that headline inflation for November was 6.8%! While that impression may give the FOMC pause when considering increasing the pace of bond purchases, the number remains positive. The FOMC should have no reason to believe that the November slowdown is the start of a trend. Therefore, there is no reason to expect the FOMC to change its plans for this meeting based on the impression of retail sales.

GBP / USD initially rebounded on stronger-than-expected UK CPI data. The headline impression was 5.1% vs. 4.7% expected and an October impression of 4.2%. The baseline reading was 4.0% vs. 3.7% expected and an October reading of 3.4%. However, as fears crept in that the Omicron variant of the coronavirus could be stronger than expected (shortly before the publication of this article, the UK reported its largest single-day increase in coronavirus cases , 78,610), the pair began to decline. Additionally, as the US opened, stocks sold in anticipation of a more hawkish FOMC, causing the GBP / USD pair to fall with them.

GBP / USD 15 minute chart

Source: Tradingview, Stone X

Levels to watch

On the daily chart, the GBP / USD pair broke a higher breakout of a descending wedge. However, the pair is threatening to move back below the upper trendline of the descending wedge at 1.3200. Support below is at the December 9 low and 38.2% Fibonacci retracement of March 2020 lows to May 2021 highs near 1.3166. Below is the lower trendline of the corner near 1.3105 and then the support level of the psychological number of 1.3000. If the wedge holds and the price goes up, there are well-defined horizontal resistance levels before hitting the target (1.3513). They are at 1.3278, 1.3359 and 1.3412. The 200-day moving average also fell below target at 1.3492.

Daily GBP / USD Chart

gbp/usd forex 15 décembre
Source: Tradingview, Stone X

As the FOMC meeting approaches, stocks are down and the US dollar is higher. Weak retail sales could not push stocks higher (i.e. thoughts of shrinking from the decline). Despite stronger CPI data from the UK, the high number of new coronavirus cases continues to dominate the GBP / USD pair. That could change after the FOMC meeting!

And don’t forget the European Central Bank meeting tomorrow!

By Joe Perry, » Official site

The Week Ahead in Forex October 2-7, 2022

Disclaimer: The information and opinions contained in this report are provided for general information only and do not constitute an offer or a solicitation to buy or sell forex foreign exchange contracts or CFDs. Although the information contained in this document has been taken from sources believed to be reliable, the author does not guarantee its accuracy or completeness, and assumes no responsibility for any direct, indirect or consequential damages that may result from the fact that someone relies on such information.

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