The British pound has increased in value, with GBP/USD now at 1.3484, a rise of 0.49%. This week, the pound has grown by 1.5%, reaching levels not seen since February 2022. April’s retail sales numbers were better than expected, showing a 5% increase year-on-year, up from a revised 1.9%. This is the fastest growth rate since February 2022, exceeding the forecast of 4.5%.

Current GBP and USD Trend

GBP/USD is trading close to 1.3500, its highest level since February 2022. Although the technical outlook indicates overbought conditions, any corrections may be short-lived. In April, retail sales in the UK rose by 1.2% compared to the previous month, outpacing the expected 0.2% rise. This strong data supported the pound’s strength at the beginning of the European trading session. The pound reached a peak of 1.3500, driven by favorable retail sales figures. A bullish continuation pattern is visible on its weekly chart and has surpassed key resistance levels at 1.3434/44. Statements made here involve risks and should not be taken as investment advice. Individuals should do their own research before making financial decisions. This information may not be error-free or up-to-date. Investing in open markets carries risks, including the possibility of financial loss. With the pound reaching its highest point in over two years and exceeding retail expectations, the focus now is on whether this momentum can continue in the coming days. The retail sales numbers not only exceeded forecasts but also delivered a significant boost. The annual growth jumped to 5%, while the monthly increase soared to 1.2% when only 0.2% was expected. Such an increase fuels bullish sentiment in trading. The push above the 1.3434/44 resistance shows strong recent sentiment. The price reaching and holding above 1.3500 indicates that traders are confident in the optimism. The weekly chart patterns suggest a clear continuation, encouraging new trades or re-entries from early closures. Some indicators are signaling overbought conditions, which could lead to brief pullbacks. However, with the volume and positive macro data, deeper corrections seem unlikely without new triggers.

Future Directional Trades

Since wage growth, inflation, and central bank outlook have not shown signs of bearishness, the pound’s strength seems solid. However, traders managing short-term positions or using high leverage may need to be patient. With prices nearing post-2022 highs, many traders may be adjusting their positions, which could lead to volatility in those levels. Currently, the signal for directional trades points toward continuation rather than reversal. Though this doesn’t mean prices will just keep rising, it shifts the responsibility back to sellers. New short positions need to prove their effectiveness below minor retracement levels for deeper pullbacks to occur. For now, supportive data continues to hold strong. For those placing directional trades, consider support around the recently cleared 1.3430 levels, which may serve as a reference for reversals or bounces. Traders using spread positions might find it beneficial to widen their strategies, especially as implied volatility decreases yet the bias remains consistent on larger timeframes. Fundamentally, the upcoming labor market updates or any Bank of England comments could surprise, positively or negatively. Until then, price action remains key, with the technical perspective remaining strong. Create your live VT Markets account and start trading now.

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