The British pound has reversed directions on Friday and posted slight losses. Currently, GBP/USD is trading at 1.3729, down 0.28% on the day.
The global calendar was unusually light this week, but the UK did provide the markets with some key releases on Friday.
Retail sales for June kicked off the day, and registered a modest gain of 0.5%, just edging above the consensus of 0.4%. Still, the gain was welcome news after the -1.3% decline in May. The retail sector is in decent shape, with sales 9% above the pre-Covid level. Looking ahead, the reopening of the UK economy this week should be a significant boost for retail sales, as consumers will be looking to spend some savings that have accumulated during the lockdown periods.
At the same time, we are seeing a spike in delta variant cases in the UK, which could dampen the confidence of shoppers. The British Medical Association has sounded the alarm, warning that the lifting of restrictions could result in a massive resurgence of Covid. The reopening of the economy, along with the removal of almost all health restrictions, is a very risky experiment that is being watched around the world. Whether the gamble pays off or not will have profound implications on the public as well as the British economy.
The pound has lost ground as PMIs slowed considerably in July. Services PMI fell to 57.8, down from 62.4, while Manufacturing PMI came in at 60.4, down from 63.9. Both PMIs slipped to 4-month lows and were short of the consensus. Still, it should be remembered that both manufacturing and services are in good shape as the PMIs remain well into expansionary territory.
GBP/USD Technical Analysis
- There is resistance at 1.3863. Above, there is resistance at 1.3961
- On the downside, 1.3714 is the first line of support. This is followed by support at 1.3663