GBPUSD extends recovery for the fifth day; UK retail sales / May/Merkel meeting in focus
Sterling maintains firm tone in early Friday’s trading and extends steep recovery leg from 1.3764 (09 Feb correction low) into fifth straight day, posting new nearly recovery high at 1.4144 (the highest in nearly two weeks).
Strong bullish acceleration in past two days resulted in probe through pivotal barrier at 1.4123 (Fibo 61.8% of 1.4344/1.3764 pullback) today, with close above here to generate fresh bullish signal for further advance.
Next barrier lies at 1.4207 (Fibo 76.4%), followed by 1.4277 (01/02 Feb double top / lower platform) and key resistance at 1.4344 (25 Jan peak) the highest since 24 June 2016 Brexit vote.
Session low at 1.4088 marks initial support, followed by broken 20SMA at 1.4037, which is expected to keep the downside protected.
Technical studies are in full bullish setup and underpinning with focus turning on release of UK retail sales and meeting between UK PM Theresa May and German Chancellor Angela Merkel.
Retail sales are forecasted for significant rise in Jan (m/m 0.5% f/c vs -1.5% in Dec / Core m/m 0.6% f/c vs -1.6% in Dec, while annualized figures are forecasted to rise over 1% in Jan).
Release at/above forecasted levels would further inflate pound and accelerate recovery.
Market participants will be also closely watching the outcome of the meeting of UK/Germany leaders who will try to overcome the difficulties in negotiations of divorce between the UK and European Union.
Res: 1.4156; 1.4200; 1.4277; 1.4344
Sup: 1.4088; 1.4021; 1.4000; 1.3960