GBP/USD is on a rebound ahead of the UK retail sales on Friday. On Wednesday, the country’s Office of National Statistics reported that consumer prices rose by 0.6% in April on a month-on-month basis. The figure matched analysts’ estimates and was higher than 0.3% in March. At an annualized rate, it rose by 1.5% compared to the forecasted 1.4% and prior month’s 0.7%. With the exclusion of food and energy components, the core CPI rose by 0.3% MoM; a point lower than the predicted reading.
In Friday’s session, analysts expect the UK retail sales reading to come in at 4.5% MoM; lower than the prior month’s 5.4%. On a year-on-year basis, the forecasted 36.8% is significantly higher than March’s 7.2%. The inflation numbers come on the same week that the UK entered the third phase of reopening. The country’s economic recovery is largely founded on the progress of its jab program.
GBP/USD will also be reacting to preliminary PMI numbers from both the UK and the US. In the UK, the manufacturing and services PMI is forecasted at 60.7 and 60.1 respectively. At the same time, the preliminary US manufacturing PMI is expected to come in at 60.2. Notably, a reading above 50 signals expansion of the sector. Subsequently, it is a bullish catalyst for the relevant currency.
GBP/USD Technical Outlook
GBP/USD has recouped some of the previous session’s losses ahead of the UK inflation data on Friday. At the time of writing, the currency pair is up by 0.47% at 1.4180. It is finding support at 1.4100 along the 50-day exponential moving average.
I expect the bulls to retest the three-month high of 1.4220 hit on Tuesday. However, at its current level, it may pull back to 1.4150 before rebounding. However, this thesis will be invalidated by a move below 1.4100.