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Today’s Trading Edge: GBP/USD shrugs off retail sales miss

Posted by WorldWideMarkets . on Apr 21, 2016 7:34:29 PM

WWM_GBPUSD_APR_21_2016.jpg

The British pound is finishing the week slightly stronger despite some weaker data.  Thursday saw retail (including –auto fuel) decline -1.3% for the month of March, matching December’s decline which was he sharpest drop since January 2014, and coming well below the estimate of -0.1%.  Public sector borrowing did improve slightly but the focus was on retail sales. 

The recent weakness for cable has been attributed to the Brexit risk, a British departure from the European Union.  Price action on the GBP/USD daily chart shows that today’s high respected the 100-day SMA.  If we see further weakness, price may look to recapture the 50-day SMA and target the 1.4100 handle.  Major support remains the 1.3800.  A bullish bias may return if we see price trade above the 1.4500 zone and we start to see a dissipating risk of a Brexit.  If price continues to stabilize and we see sentiment strongly shift to staying in the EU camp, major resistance will come from the 1.4910 level. The latest Ipsos poll showed 49% for staying in EU and 39% for leaving. 

The trade: Sell GBP/USD at 1.4350 with a stop loss at 1.4000 and a take profit at 1.4150.  The Risk/Reward Ratio is 1:3

Topics: GBPUSD, cable, $GBP, Sterling, EU

 

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