In the bigger picture, price actions from 1.3503 (2009 low) are treated as consolidations to long term down trend from 2.1161, no change in this view. Recent development painted a mixed picture on whether such consolidation is finished. We'll stay neutral first. On the upside, break of 1.6165 will favor that such consolidation is going to extend with another rise. But strong resistance should be seen at 50% retracement of 2.1161 to 1.3503 at 1.7332 to limit upside to conclude the consolidation. On the downside, below 1.5234 will revive the case that such consolidation is completed and bring deeper fall to 1.4229 support for confirmation.
In the longer term picture, the corrective nature of the multi-decade advance from 1.0463 (85 low) to 2.1161 as well as the impulsive nature of the fall from there suggests that GBP/USD is now in an early stage of a long term down trend. Another low below 1.3503 is anticipated after consolidation from 1.3503 is confirmed to be completed.
Economic data from UK indicated that, the country’s retail sales rose by 1.8 percent in March compared to previous decline of 0.8 percent in February.UK retail sales for March came in stronger than anticipated, expanding by 1.8% m/m including auto fuel sales and 1.5% if auto fuel sales are stripped out of the number. That is much stronger than had been forecast particularly in terms of the core ex-auto fuel number. While fuel sales were up by a very robust 4.6%, they still only account for 0.3% of the 1.8% gain. The strong retail sales number has positive implications for UK GDP as retail sales had been tracking negatively for the quarter (+0.4% m/m in January, -0.8% in February). While one implication of the unusually high retail sales growth is that some amount of spending normally done is April was brought forward to March due to very warm weather (particularly spending at garden centers), in the final analysis, consumption for Q1 – which looked like it might drag on overall growth – now looks like it will be fairly positive. Despite the solid print, however, pound sterling only put in a middle of the pack performance against the USD overnight.
Members of the Bank of England’s Monetary Policy Committee voted 8-1 to hold the size of its asset-purchase program, the centerpiece of its quantitative-easing strategy, at 325 billion pounds ($519.3 billion) at their monthly policy meeting.
The pace of inflation in Great Britain accelerated to 3.5% in March from 3.4% the previous month, the U.K. Office for National Statistics reported. On a monthly basis, inflation rose 0.3%. Economists had forecast a 0.3% monthly rise
The unemployment rate in the U.K. for the three-month period ending February 2012 came in at 8.3%, down from a prior reading of 8.4%, the Office for National Statistics reported on Wednesday.
British retail sales volumes grew at their fastest pace since January 2011 last month, posting a 1.8% monthly rise in March and a 3.3% rise compared to the same month last year, the U.K. Office for National Statistics reported Friday.
Construction employment should continue to stabilize as those workers finishing jobs have opportunities for new ones Although U.S. builders start work on new homes at a sharply slower March pace, construction permits jump to their highest level in 3 1/2 years, data showed. Builders began construction on new U.S. homes at a slower pace in March, but permits jumped to the highest level since September 2008, the Commerce Department reported Tuesday. Housing starts fell 5.8% last month to an annual rate of 654,000.
Rising layoffs, falling home sales and slowing manufacturing activity are sparking fears that the economic recovery is headed for a springtime stall for the third year in a row.
There isn’t much in the way of eurozone eco this week, except for the United Kingdom. On Monday, house price data for March is due in the United Kingdom. In the UK, first-quarter gross domestic product data will dominate news. April consumer confidence data is due in the United Kingdom.
Economic Data Highlights
Germany Mar. Producer Prices out at +0.6% MoM and +3.3% YoY vs. +0.4%/+3.1% expected, respectively and vs. +3.2% YoY in Feb.
Germany Apr. IFO Survey out at 109.9 vs. 109.5 expected and 109.8 in Mar.
UK Mar. Retail Sales ex Auto Fuel out at +1.5% MoM and +2.8% YoY vs. +0.4%/+1.3% expected, respectively and vs. +1.0% YoY in Feb.
Canada Mar. Leading Indicators out at +0.4% MoM vs. +0.5% expected and +0.7% in Feb.
Canada Mar. Consumer Price Index out at +0.4% MoM and +1.9% YoY vs. +0.5%/+2.0% expected, respectively and vs. +2.6% YoY in Feb.
Canada Mar. Core CPI out at +0.3% MoM and +1.9% YoY as expected and vs. +2.3% YoY in Feb.
Upcoming Economic Calendar Highlights (all times GMT)
Euro Zone ECB’s Asmussen to Speak (1645)
Australia Q1 Producer Price Index (Mon 0130)
China Apr. Flash HSBC Manufacturing PMI (Mon 0230)
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