Pound Firms Up As Trade Balance Strong
Data from the Office for National Statistics showed that the UK trade deficit for March reduced to £3.8 billion from the reading of £4.3 in February. In particular, the goods trade balance registered a shortfall of £11.2 billion in March, meeting economists’ forecast, narrowing from £11.4 billion in the preceding month. Meanwhile, the surplus for the services sector extended from £7.1 billion in February to £7.4 billion in March. The latest data hinted at a slight recovery in UK’s economy.
On Monday, the British Retail Consortium (BRC) had reported that the annual rate of retail sales last month witnessed the biggest decline since last August. In April, the BRC retail sales index fell 0.9% from a year earlier, burdened with a very low turnover in the clothing and footwear sector due to prolonged cold weather. The index decreased 0.7% in the previous month.
A month ahead of the Brexit vote, the BOE Governor commented that the central bank was adopting a wait-and-watch approach for future monetary policy. The UK’s official benchmark rate is to be discussed by the BOE at its scheduled Thursday meeting.
Yesterday, the Federal Reserve announced that conditions in the US labor market were brighter last month as the labor market condition index inched down by only 0.9%, on monthly basis in April, compared with a fall of 2.1% in March. Wholesale inventories data for March is scheduled for today in the US. It is expected to increase 0.2% after sliding 0.5% in the month before. The dollar index DXY today is flying high, standing at 94.23, up 0.07% from the last close.
Fig. GBPUSD D1 Technical Chart
The stochastics chart shows that the pair GBPUSD dropped significantly into oversold territory after hitting the resistance of 1.47696 a week ago. Today, sterling is on its way to strengthening against the USD, climbing up from the support of 1.43710. The %K line (blue line) has already crossed the %D line (red line). A reversal into uptrend is likely to be confirmed. The signal trend indicator suggests a buying position as the green arrow has formed below the price chart.
Buy at 1.44522, Stop loss at 1.43904, Take profit at 1.45277