Today, on March 27th, the British Pound has gained a bit of value against the US Dollar. This took place after the Office for National Statistics published several economic reports, which turned out to be positive, thereby reassuring the bulls trading GBPUSD.
In particular, during the European trading session the currency pair gained 0,31% to hit 1,6623.
Indeed, the UK economy seems to be growing faster than expected. This is confirmed by the UK’s retail sales figures released earlier today. In particular, the February retail sales volume increased by 1,7% m/m and 3,7% y/y. This is a major achievement for the sector. It should be noted that experts and expected for a more moderate outcome - 0,3% and 2,5% respectively. This report alone allowed the British Pound to gain more than 70 points against its American counterpart instantly after the release as the market go reassured about the near-term prospects of the British economy.
This faster pace of economic growth in the UK still raises some concerns as experts are worried about higher housing prices in the UK. The Bank of England is determined to monitor the domestic housing market as well as the level of mortgage lending.
At the same time, British financial experts are sure that the UK economy is not vulnerable and sensitive about the current economic slowdown in China and all those geopolitical shocks in Eastern Europe, including the situation in Ukraine and Russia’s annexation of the Crimea.
On top of that the BOE is determined to introduce a series of stress tests the way it is don by the Fed. The idea is to check whether the British banking system can withstand possible economic and financial shocks. The concept will be introduced in late April.
Meanwhile, the preliminary results of the Fed’s testing indicate that 25 out of the 30 tested banks are allowed to pay dividends equal to 60% of the expected net profit. In particular, Citigroup was allowed to quadruple the quarterly dividends and to conduct share repurchase (also known as stock buyback). At the same time, Bank of America and Goldman Sachs were forced to present less optimistic dividend forecasts.
Today’s American session is expected to bring us the figures on last week’s initial and secondary US jobless claims along with some other economic figures.
Forex
According to the recent technical analysis conducted by Masterforex-V Academy (H4 chart of GBPUSD), it is very likely that the recent retracement move seen in the market of GBPUSD is of secondary nature (this is still not a long-term downtrend). As we already know, the price started recovering after the reassuring news.
If the rally continues, we may well see the price hitting 1,6665 and 1,6743.
Alternatively, if the price goes down again while being supported by better-than-expected US economic figures, the price will go on declining within the scope of a mid-term retracement move. If the price manages to break and consolidate below the bottom of the MF sloping channel, we may see a deeper decline down to 1,6462 and 1,6382.
