Global macro overview for 25/03/2016:
The UK Retail Sales data was released yesterday and it was better than expected. The market expected the sales to be at the level of -0.7% m/m (3.5% y/y) after very good figures were logged last month ( 2.3% m/m; 5.4% y/y). But the market was surprised with the lower than expected drop to the level of -0.4% m/m (3.8% y/y). In conclusion, the British consumers had been supporting the domestic economy in a rather sturdy manner over the past few months. That is why the BoE predicted household consumption would increase by 2.75% this year. Nevertheless, despite the overall good data, there are some first signs of a possible slowdown in consumer spending. The British Retail Consortium has recently published a report showing annual growth in retail spending decrease to 1.1% in February from 3.3% in the prior month. Now there is still a question whether the households with more disposable income (saved due to near zero inflation and record employment) will continue to spend the hard earned cash to support the domestic economy.
Let's now take a look at the technical picture of the GBP/USD pair at the H4 time frame. We can clearly see the recent break out below the golden trend line and the price rejection at the level of 1.4182 (Doji Candle). Currently, the market is trying again to test the golden trend line form below. However, as long as the level of 1.4182 is not broken, the bears remain in control over this market.
