Two trades to watch: GBP/USD, FTSE

GBP shrugs off grim retail sales data, keeps 1.40 in sight. Could the FTSE be looking at a deeper correction?

FOREX 3

GBP shrugs off grim retail sales data, keeps 1.40 in sight

UK retail sales missed forecasts -8.2% MoM in January, well short of -2.5% expected.

The collapse in sales comes as the UK struggles through its 3rd national lockdown

Rapid vaccine rollout and reopening talks is keeping GBP supported

UK PMI data for February is due later today and is expected to show that the manufacturing remains in expansion at 54, whilst services remain deep in contraction 40.7.

Where next for  GBP/USD ?

GBP/USD hit is highest level in almost three years on Thursday.

The chart shows a well establish short term bullish trend. However the RSI on the daily chart is on the brink of overbought territory. With this in mind GBP/USD could encounter tough resistance at 1.40 and the top band of the ascending channel at 1.4035. However a push through this region could see bullish momentum gain traction.

On the downside, any moves lower to support at 1.3950 (today’s low) or even 1.3910 (20 sma) could be considered buying opportunities. A break below the lower band of the ascending channel at 1.3880 could see more bears jump in a see the start of the deeper pullback.

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FTSE set for deeper correction

After a weak handover from Asia the  FTSE looks to open flat lagging behind its European peers

The FTSE has come under pressure from the strengthening Pound in recent sessions

Banks remain in focus with NatWest reporting and oil majors as oil eases back from 13 month highs reached earlier in the week.

Where next for the FTSE?

The FTSE jumped firmly higher at the start of the week hitting 6810, before trending lower across the second half of the week.

The price found support at 6575 on the ascending trendline dating back to the start of the month.

The 20 sma has just crossed under the 50 sma in a bearish signal, although the RSI is at 50 suggesting a neutral bias for now. 

The FTSE is currently testing its 50 sma at 6615, a break below this level could see the ascending trendline retested, with a close below the ascending trendline potentially sparking a deeper selloff towards 6450.

Should the price hold above the ascending trendline support a recovery back towards recent tops 6810 could be on the card.

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