U.K. retail sales are forecasted to have fallen 0.4% in February as mounting job losses and a deepening economic recession are expected to have led consumers to retrench. A negative reading would end three straight months of improving consumption which was derived from falling energy costs and retailers slashing prices.
[B]Fundamental Outlook[/B]
U.K. retail sales are forecasted to have fallen 0.4% in February as mounting job losses and a deepening economic recession are expected to have led consumers to retrench. A negative reading would end three straight months of improving consumption which was derived from falling energy costs and retailers slashing prices. Last month’s surprising 2.5% increase was led by a 6.1% jump in apparel sales which saw prices cut by more than 4%. However, last month saw prices rise by 0.8% which could lead to a significant drop in the component and drag the headline number with it. A dour report would support the bearish technical outlook which is calling for a possible retrace to 1.4073. A drop in retail sales and the GBP/USD falling below 1.4500 could be seen as a trigger for a short position.
[B]Technical Outlook
[/B]
Near term, there may be 5 waves up from 1.3653. This leaves open the possibility of a correction back to at least 1.4390 and possibly Fibonacci support in the 1.4073-1.4206 zone. Staying below 1.4665 keeps the near term trend down.
For More Technical Analysis Visit the Daily Technical Report
[I]To discuss this report contact John Rivera, Currency Analyst: [email protected][/I]