GBPAUD Running out of Steam ?


GBPUSD, H4            

The close of the latest 4 hour candle was sufficient for us to take a SHORT position in this pair following a run up. The UK Retail Sales data (see below) simply added some fundamental momentum.  The 4hour candles had been forming a steady six consecutive march upwards from the Hammer candles of July 19.  The peak bull candle at yesterday’s (July 20) close and with a long wick followed by the following bearish candle with a wick to the south suggested at least a pause in the uptrend or a further retrace.  The 08:00 candle this morning suggested further downside with target 1 at 1.7546 and possible target 2 at 1.7465 where we started a few days ago.

UK June retail sales undershoot expectations due to wet weather, which stirred apathy for summer fashion purchases. The headline sales figure contracted by 0.9% m/m, reversing the 0.9% m/m gain of May. The median forecast had been for a 0.5% decline. The y/y comparison was 4.3%, short of the 5.0% median forecast and down from the 5.7% y/y gain seen in May. It’s not clear if the June 23 referendum, either the run-up or in the initial wake of, had much impact. Anecdotal signs suggest that retail sales dipped in the week after the Brexit vote, but have since rebounded.

Janne Muta

Chief Market Analyst

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About Janne Muta, HotForex’s Chief Market Analyst

jmutaJanne Muta is a seasoned industry professional with over 16 years experience in the global markets. Originally from Finland, Janne has worked for institutions in both Helsinki and London as an institutional fund manager, global market analyst and FX educator.

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