GBP/USD has eased on its decline ahead of the UK retail sales. After the sales rose to a record-high of 42.4% in April YoY, May’s reading is expected to be lower at 29.0%. With the exclusion of the volatile food and energy components, the forecasted 27.3% is lower than the prior month’s 37.7%. Better-than-expected numbers will be a bullish catalyst for the currency pair.
The data comes at a time when the UK Prime Minister, Boris Johnson has postponed the final reopening phase by another month. The decision results from the rapid spread of the Delta COVID variant. The government plans to use the extra time to advance its vaccination program. It predicts that two-thirds of the populace will have received two shots as of 19th July.
At the same time, the rebounding of US Treasury yields is exerting pressure on GBP/USD. After erasing Wednesday’s gains at 1.46 on Thursday, it is on a rebound at its current 1.51. The yields are offering support to the US dollar, which is currently trading at its two-month high of 91.86.
GBP/USD technical outlook
GBP/USD is up by 0.05% at 1.3932. The currency pair is finding support along 1.3900 after falling for two consecutive sessions. Since the beginning of the week, it has dropped by about 1.37%. On a four-hour chart, it is trading below the 25 and 50-day exponential moving averages. After getting into the oversold territory on Thursday with an RSI of 22, a corrective rebound was expected. Currently, it is on the border of the oversold zone with an RSI of 30.
Depending on the outcome of the UK retail sales, GBP/USD is likely to rise further o the important resistance level of 1.4000. Above that level, the next target will be along the 50-day EMA at 1.4074. On the flip side, it may continue trading sideways along 1.3900 as the bears attempt to hit 1.3800.