U.K. retail sales in May are expected to have risen for a third straight month by 0.3% as consumers continue to become more optimistic about the economy
[B]June 18[/B]
[B]U.K.[/B][B] Retail Sales (MAY)(MoM)(GMT 12:30: 08:30 EDT)[/B]
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[B]Expected: 0.3%[/B]
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[B]Previous: 0.9%[/B]
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[B]Fundamental Outlook[/B]
U.K. retail sales in May are expected to have risen for a third straight month by 0.3% as consumers continue to become more optimistic about the economy. Increases in non-food and non-specialized stores by 1.5% and 3.5% respectively, is a good sign that Britons are starting to spend more on non-discretionary items. A stabilizing housing market and the rate of job loses slowing to 39,300 in May from 49,600 the month prior, will add to confidence. Building domestic growth will add support for the pound which has risen over 3000 pips since early March. However, the technical outlook is calling for a top and a reversal which is possible with the outlook for a global recovery dimming. I would remain bullish until we see a break below the 20-Day SMA at 1.6198.
[B]Technical Outlook [/B]
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I want to stay focused on the big picture because it is possible that the GBPUSD is at a significant turning point. Remember, the entire decline from 2.1160 is most likely unfolding as an impulse (5 waves) and just 3 waves have unfolded. The rally from 1.3500, although strong, still counts well as a correction (3 waves). In fact, price reached and reversed at a former 4th wave (common guideline). The rally from 1.5800 was an impulse, making it possible that wave v of C was truncated. Staying below 1.6626 keeps the topping scenario intact. There is the risk of a rally through 1.6510 before the larger trend turns down for good. Such a scenario would prevent a low risk short opportunity.
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