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