British pound bounces back after mixed UK retail data
The British pound bounced back today after the British Retail Consortium (BRC) released mixed economic numbers. The data showed that UK retail sales slumped by the biggest rate in 25 years as the country suffered the worst pandemic. The sales dropped by 0.3%, the worst performance since 1995. Sales dropped significantly in pubs, restaurants, and hotels - the biggest casualties of the pandemic. Online sales on the other hand boomed as more people turned to the internet for their purchases. However, the biggest risk to the sterling is negative interest rates in the UK that have been suggested by some BOE members.
The price of crude oil soared to the highest level in 11 months due to the latest decision by Saudi Arabia to slash production. The country will cut about 1 million barrels per day in February and March. This will help support higher prices as the number of coronavirus cases continues rising internationally. The price is also rising ahead of the US inventories data by the American Petroleum Institute (API) and the Energy Information Administration (EIA). Analysts expect these numbers to show that the inventories dropped last week. Further, the price is rising ahead of a speech by Joe Biden about his stimulus plans.
The US dollar index was little changed today as traders eye the ongoing impeachment proceedings against Donald Trump. Democrats have accused him of supporting last week’s protests that led to 4 deaths. The currency is also waiting for statements by Fed officials, including Raphael Bostic, Lael Brainard, Lorretta Mester and Robert Kaplan. Also, the currency will react to the latest JOLTs job openings data.
The GBP/USD pair rose to an intraday high of 1.3590 after the UK retail numbers. On the hourly chart, this price was along the descending trendline that connects the highest points this month. The momentum indicator has continued to fall while the price is slightly above the 25-day exponential moving average. The signal and histogram of the MACD have moved above the neutral level. Therefore, the pair will remain in a downward trend so long as it is below the falling trendline.
The EUR/USD is wavering today ahead of key statements by Fed officials. It is trading at 1.2150, which is an important psychological level. It has also moved below the 23.6% Fibonacci retracement level and the 25-day EMA. Also, the Average Directional Movement Index (ADX) has continued rising, which is a sign of the strength of the trend. Therefore, the pair may continue falling as bears target the next support at 1.2067.
The XAU/USD pair bounced back today after the sharp decline yesterday. It is trading at 1,860, which is slightly above yesterday’s low of 1,860. On the four-hour chart, the Relative Strength Index (RSI) has moved from the oversold level of 20 to the current 43. The histogram and the MACD have made a bullish crossover. However, the price seems to be forming a bearish pennant pattern. Therefore, there is a likelihood that it will resume dropping.