TheNews

A 0.4% rebound in U.K. Retail Sales may heighten the appeal of the British Pound and fuel the near-term breakout in GBP/USD as it puts increased pressure on the Bank of England (BoE) to raise the benchmark interest rate off of the record-low.

What’s Expected:



Why Is This Event Important:

Positive data prints coming out of the U.K. economy may highlight a tightening race between the BoE/Fed to normalize monetary policy, and GBP/USD may continue to retrace the decline from July 2014 should the fundamental developments spur a growing dissent within the Monetary Policy Committee (MPC).

Expectations: Bullish Argument/Scenario

Release	Expected	Actual
Average Hourly Earnings ex. Bonus (3MoY) (JUN)	2.8%	2.8%
Jobless Claims Change (JUL)	1.0K	-4.9K
Net Consumer Credit (JUN)	1.1B	1.2B

Stronger wage growth paired with the expansion in private-sector credit may boost household spending in the U.K., and a strong rebound in retail sales may generate fresh monthly highs in GBP/USD as market participants ramp up expectations for a BoE rate hike.

Risk: Bearish Argument/Scenario

Release	Expected	Actual
Consumer Price Index Core (YoY) (JUL)	0.9%	1.2%
Producer Price Index Core- Output n.s.a. (YoY) (JUL)	0.2%	0.3%
GfK Consumer Confidence (JUL)	5	4

However, higher prices along with narrowing confidence may drag on consumer spending, and a dismal print may drag on the British Pound and spur a further delay of the BoE’s normalization cycle as the majority continues to look for a stronger recovery.

How To Trade This Event Risk
Bullish GBP Trade: Retail Sales Rebounds 0.4% or Greater

• Need green, five-minute candle following the release to consider a long British Pound trade.
• If market reaction favors bullish sterling trade, buy GBP/USD with two separate position.
• Set stop at the near-by swing low/reasonable distance from entry; look for at least 1:1 risk-to-reward.
• Move stop to entry on remaining position once initial target is hit, set reasonable limit.

Bearish GBP Trade: U.K. Household Spending Falls Short of Market Expectations

• Need red, five-minute candle to favor a short GBP/USD trade.
• Implement same setup as the bullish British Pound trade, just in opposite direction.

Potential Price Targets For The Release
GBP/USD Daily

• Ongoing closes above former-range resistance may highlight a further advance in GBP/USD especially as the bullish
• RSI momentum gathers pace.
• Interim Resistance: 1.5750 (23.6% retracement) to 1.5780 (38.2% retracement)
• Interim Support: 1.5330 (78.6% retracement) to 1.5350 (50% retracement)

Impact that the U.K. Retail Sales report has had on GBP during the last release

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
JUN 2015	07/23/2015 8:30 GMT	0.4%	-0.2%	-51	-141

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