Sluggish Spending Drags GBP/USD Lower Again

Summary:

With Washington having launched strikes against southern Iran, investors are taking a cautious view on the durability of the US-Iran ceasefire, putting downward pressure on the GBP/USD exchange rate.

SELL GBPUSD

EXP

TRADING

1.34423

Entry Price

1.31000

1.37000

1.34475 +0.00014 +0.01%

0.0

Pips

Flat

1.31000

Exit Price

1.34423

Entry Price

1.37000

Fundamentals

Data released by the Confederation of British Industry (CBI) on Tuesday showed that UK retailers’ sales fell again in May due to persistently weak demand, although the decline was less severe than the record low recorded the previous month. The CBI’s Retail Sales Balance rose to a three-month high of -46, up from -68 in April, which was the lowest reading since the survey began in 1983. The indicator measures the difference between the percentage of firms reporting an increase in sales and those reporting a decrease, compared with the same period last year.

A survey released on Tuesday showed that US consumer confidence fell in May as market concerns over inflation linked to a potential war with Iran continued to mount, despite an improvement in households’ views of the labour market. The Conference Board said its consumer confidence index fell by 0.7 points to 93.1 this month. April’s figure was revised upwards to 93.8 from the previously reported 92.8. Economists polled by Reuters had forecast the index would fall to 92.0. “Consumer confidence dipped slightly in May as the inflationary impact of the war in the Middle East intensified,” said Dana Peterson, chief economist at the Conference Board. “For the second consecutive month, mentions of prices, oil and gas increased, whilst references to war, geopolitics and conflict remained high – which may indicate consumers’ concerns about the inflationary impact of the Middle East war and its potential effect on their own wallets.”

Technical Analysis

On the daily chart, the GBP/USD pair shows narrowing Bollinger Bands and flat moving averages, with prices under pressure at the middle band. The RSI stands at 48, indicating that market participants are largely adopting a wait-and-see approach. On the four-hour chart, the Bollinger Bands are also narrowing and the moving averages are flat, suggesting that prices are likely to continue their downward movement towards the lower band. The RSI stands at 47, with market participants again adopting a wait-and-see approach. The recommended strategy is to sell on rallies.

Sluggish Spending Drags GBP/USD Lower Again_1

Sluggish Spending Drags GBP/USD Lower Again_2

Trading Recommendation

Trading Direction: Sell

Entry Price: 1.345

Target Price: 1.31

Stop-loss Price: 1.37

Support Levels: 1.32, 1.30, 1.28

Resistance Levels: 1.37, 1.38, 1.41

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Sluggish Spending Drags GBP/USD Lower Again

Risk Disclosure