The GBP/USD pair closes the week with gains amid upbeat Retail Sales data from the UK and as traders digest fiscal announcement from Chancellor of the Exchequer Jeremy Hunt.
The British government announced on Thursday a succession of tax rises and spending cuts to close the fiscal gap and help to tame inflation as households’ real wages are being eroded, and interest rates are pushing the UK into a recession.
The Cable dropped to 1.1762 as a knee-jerk reaction, but the negative impact was short-lived, as investors are still assessing the announcement.
At the time of writing, the GBP/USD pair is trading at the 1.1880 zone, up 0.2% on the day and posting a 0.5% weekly advance. Cable retreated from an intraday high of 1.1950 earlier in the session.
On the data front, UK Retail Sales released by the Office of National Statistics, which measures the total receipts of retail stores, advanced by 0.6% in October, beating the consensus. Retail Sales, excluding fuel, increased by 0.3% on a monthly basis but came in below the consensus of 0.6%.
From a technical standpoint, the GBP/USD pair maintains a bullish bias, according to indicators on the weekly chart. However, the pair has lost upward momentum on the daily chart as the pair is posting lower highs, and indicators are turning flat.
On the downside, the short-term support level could be found at weekly lows at the 1.1760 area, followed by the 100-day SMA at 1.1640 and the 20-day SMA around 1.1580.
On the other hand, a decisive break above this week’s high at 1.2028 could pave the way toward 1.2140 en route to the 200-day SMA, currently at the 1.2220 zone.
