GBP/USD Remains Well Poised for Further Gains, But US Data Points Could Scupper Progress

The past 24 hours has seen the Pound Sterling rise to a near 2-month high against the USD amid positive retail sales data.

"The USD has regained some of its ground this morning ahead of housing data due at 13:30 and the release of a consumer sentiment survey. It is expected that this will continue to provide just cause for the Fed to reduce stimulus the month, which we still believe will benefit the USD," says Richard Driver at CaxtonFX.

Exchange Rate Outlook Heavily Dependent on US Data Releases

Yesterday saw the US dollar and stocks sell-off quite spectacularly in response to a host of data releases. This saw GBP/USD benefit from further support.

Today should see more of the same.

Lloyds Bank Research give us an idea of what to look out for:

"Today’s US data will provide further information on the pace of the housing recovery. Both housing starts and business permits unexpectedly fell sharply in June and a further decline in July would be a concern.

"However, we expect a strong rebound, with starts possibly up by more than 9% on the month.

"Other US data out today include the University of Michigan measure of consumer confidence for August. Last month this reached a post recession high and a level not seen since early 2007.

"Anything close to current levels would be consistent with continued acceleration in consumer spending in the second half of 2013. In contrast, Q2 productivity data are likely to be disappointing, reflecting strong employment growth alongside a weak output gain.

"However, the latter will probably be revised up and productivity should strengthen in H2."

Technical Outlook for the British Pound versus US Dollar Exchange Rate

What do the scribes have to say concerning the technical outlook for GBP/USD?

Emmanuel Ng at OCBC Bank remains bullish on GBP/USD:

"The GBP-USD was lifted on Thursday post the July retail sales figures, underpinning the positivity from the recent run of encouraging  data releases. We retain a bullish bias for the pair after the concerted break above the 200-day MA (1.5524) and the pair may consolidate around the 1.5650 area pending further cues."

Analyst Luc Luyet at MIG Bank says yesterday's decisive break through resistance bodes well for GBP/USD:

"GBP/USD made a decisive break over 1.5574 (08/08/2013 high) yesterday. This also constitutes a sustained break above the 200 day moving average. Scope is now seen for a further push higher to retest the 1.5752 high (17/06/2013)."

"Focus now turns to the multi-month falling channel that has contained trade for the last two years. Resistance currently rests near 1.6150.

"Back under 1.5102 (02/08/2013 low) is required to dampen the current bullish bias that is in place." CLICK CHART AT UPPER LEFT TO ENLARGE