GBP strong but USD marginally stronger?

Fundamental

Thursday 19th May: UK Retail Data (09.30) and US Manufacturing (13.30) (Times GMT +1)

GBP strengthened significantly yesterday (May 18) after the release of an Ipsos Mori poll showing a strengthening lead for EU Bremainers (55/37/7 in/out/undecided).

Later in the day the Fed released April’s FOMC minutes which have put a June Fed Hike back on the table.  Sterling’s rally was reversed but only modestly.

Two key FOMC members will be speaking today and if their comments resonate with the hawkishness of yesterday’s minutes release, USD will strengthen.

UK Retail Data is out just after the London open.  We heard on Tuesday that UK CPI was down in part due to decreasing clothing costs.  This may indicate low demand driving prices down – perhaps a negative bellweather for Retail Data.

US manufacturing data (the Philadelphia Fed Survey) is out just after NY open and a modest rise in manufacturing is predicted.

Technical

The pair has completed (and slightly overshot) its weekly M2 to M4 bullish move (Chart A) finding resistance around WR2 which coincides with the 1.46 psych level.

Completion of the pivot move coupled with uncertainty around Fed news might trigger profit taking around this level which would see a continuation of the retracement.

In addition H4 stochastic is overbought but not yet ready to descent), and the D1 stochastic is no longer oversold, suggesting selling pressure is increasing around the current level.

Chart A

Chart A

Consequently there is no clear move lined up for GBPUSD and price action will be news driven for the rest of the week within the nearby established range.

H4 selling pressure coupled with the daily pivot at M3 suggests that price could even retrace to minor support at 1.445 (Chart B).

Chart B

Chart B

Doveish Fed comments today and weak manufacturing data could allow Sterling’s strength to push the pair up to 1.47 whereas weak UK Retail Data could see the pair sink back to support at 1.45 or just below.

Chart B

Chart C

Wishing you a happy and pip-filled day.

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