GBP/USD Back Down Today On Lower Retail Sales

The GBPUSD is down today on lower than expected Retail Sales report which surprised with a -0.6% reading (vs expectation of 0.3% gain). In addition, BOE Governor Mevyn King warned that the economic recovery may be sluggish as bank credit remains tight. The YoY sales showed a decline of -1.1% which is the lowest reading since the data has been collected (going back to -1.1%).  Sales at non food stores dropped -1.4%.

The weak data pushed the GBPUSD back down.  The pair moved through both the 100 and 200 hour moving average in the same day for the 4th day in a row.   The movements tend to be short and swift.  The low over the last three days has been 1.6209, 1.6219 and today it hit stops and moved to a low of 1.6187.  The inability of being able to move through the 1.6200 level could be indicative of option expiration may be supportive against the level.  When this happens either the price remains supported at the strike price as option holders hedge their position and look to add pips on the rebound, or if there is a push through the level with market volume, it could lead to strong selling as hedgers and non hedgers sell together. Note this is just speculation given the inability to move through this level.

The bias does remain to the downside.  The high corrective price off the lows took the pair up to the 1.6278.  The last high reached 1.6262.  These levels should contain the moves.  Above is the 38.2% retracement of the move down today at 1.6295.  The 200 hour moving average comes in at 1.6320.

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