GBP/USD has lost almost 100 pips during the first half of the day even though retails sales data came out better than expected. As usual, it’s all about market sentiment and expectations.
Retail sales has come significantly above expectations (0.6% mom, 2.9% yoy vs 0.4% mom, 2.5% forecast). But right before the data cable was hit hard by the news that Theresa May is possible to stay be in power for remainder of term. And positive effect from the retail numbers was very short-term.
Why investors do not trust current PM? Just because she lost the Parliament elections and is perceived as a weak leader not ready to take the UK out of the EU smoothly. Yes, it’s all about politics again.
However, we don’t rule out sell the rumors – buy the facts scenario. As soon as we got the expected final data on negotiations during this week, there will be a retracement. In this case, GBP/USD may come back to 1.3020 and target at 1.3090.