Today’s Retail Sales number will be the first high impact news release out of the UK this week that is somewhat more tradable, as the CPI and MPC Meeting Minutes released earlier failed to move the market; retail sales usually makes up a large portion of the GDP number, market should react to this release with exaggeration if we get our deviation today… here is the forecast for this release:
4:30am (NY Time) Forecast 0.3% Previous 0.4%
ACTION: GBP/USD BUY 1.0% SELL -0.3%
Retail Sales by definition is a direct measurement of consumer activities at the retail levels. A higher release is generally good for the economy, and better for it’s currency; a lower release is considered as negative for the economy and not good for it’s currency.
Our tradable deviation or surprise factor for UK Retail Sales is 0.6%. If our deviation is hit, we can expect the market to move at least 50 pips within the hour, with a historical accuracy of 72%. Judging from the recent rebound in the market from the multi-year lows against USD, GBP may very well be supported today as the recent exaggerated loss against USD due to European debt crisis is due for consolidation… If the release comes out at a positive 1.0% or better, I’d BUY GBP/USD; however, if we get a negative release, then another round of Sterling sell-offs may be triggered…
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