British pound breakout soon?

British pound breakout soon?

2022-05-20 • Updated

Great Britain released retail sales data on May 20, 9:00 GMT+3. The reading outperformed expectations greatly (+1.4% actual vs. -0.3% forecast). Consumer spending is important for the economy as it is the main metric for understanding the market’s sentiment. Looking more broadly, in the three months to April 2022, sales volumes fell by 0.3% compared with the previous three months; this continues the downward trend since summer 2021.

It is unusual for Britain to see an increase in spending as the UK continues the tightening program, and the UK CPI is 9.0% (a 40-year high). The MPC forecasts that it will rise to double digits in the fourth quarter of this year. This is a very uncomfortable situation for a monetary policymaker targeted at achieving inflation of 2%.

Huw Pill, head of monetary analysis in BoE, expects inflation to return to the targets shortly after entering the double-digit zone.


As for the chart, high retail sales data is very bullish for the GBPUSD pair. We have an inversed head and shoulders pattern. On the breakout, GBPUSD is likely to reach 1.2700 over the next week. Look for the soar above 1.2500 before opening a trade.

GBPUSD H4 chart

Resistance: 1.2500, 1.2700, 1.3000

Support: 1.2340, 1.2170





As I earlier indicated in my article this week, I am expecting an upward push from the Dollar as a reaction from the Demand zone I have marked out. The PPI release earlier moved prices a bit but lacked sufficient momentum to cause a significant break of structure - and thus, no change of trend.

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The views here are solely based on Technical Analysis techniques using my personal Smart Money approach. Hence, it is important to understand that the trading of CFDs comes at a risk; if not properly managed, you may lose all of your trading capital. To avoid costly mistakes while you look to trade these opportunities, be sure to do your own due diligence and manage your risk appropriately.


Even though we've only witnessed sluggish movements from the Dollar over the past few weeks, the general idea and bias still seem intact and untampered. The bullish impulse however can be seen as "searching for support".

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