Retail sales in the United Kingdom dropped to 24.6% from 42.4%, missing market expectations of 29.7%. So far, the data has been influenced by the low base effect, making it difficult to draw any conclusion. By focusing on monthly statistics, it becomes clear that the state of the UK retail sector is deteriorating. Retail sales should have increased by 2.1% but the reading actually fell by 1.4%.
Thus, it is no surprise that the pound sterling has started incurring losses after the publication, and by taking into account the outcome of the FOMC meeting, the price fell rather sharply. So far, there has been no rebound attempt. Given the currency's overbought status, a correction may occur without any reason. Today is a perfect day for a correction as the macroeconomic calendar is completely empty.
Retail sales (United Kingdom):
Last week, a strong bearish trend in GBP/USD was observed. As a result, the pound sterling lost more than 2%.The currency is now overbought. That is why traders are trying so hard to determine a pivot point because a correction is likely to occur relative to it.
As for market dynamics, an increase in speculation is observed. All this explains high volatility in the past several days.
Given the current location of the quote, fluctuations are expected in the 1.3785/1.3830 range.
According to the daily time frame, there is a possibility of a strong bearish movement and a reversal signal of the intermediate-term trend.
Notably, the reversal signal will be confirmed if the price consolidates below 1.3650.
In this light, speculation is still observed in the market. That is why the price is expected to fluctuate in the 1.3785/1.3830 range. A good trading plan would be to break one of the boundaries of the set range.
In terms of complex indicator analysis, technical indicators are giving a sell signal due to a strong bearish trend.
InstaForex Group