Forex Signal (Thu April 21 2011, 4:30am NY Time EST) - UK Retail Sales m/m

Henry Liu

Former FPA Special Consultant
Today’s Retail Sales number from UK will be widely watched as this is a high impact yet tradable report. Here is the forecast for this release:

4:30am (NY Time) Forecast -0.5% Previous -0.8%

The Trade Plan

Retail Sales by definition is a direct measurement of consumer activities at the retail levels. A higher release is generally good for the economy, and better for it’s currency; a lower release is considered as negative for the economy and not good for it’s currency.

Our tradable deviation or surprise factor for UK Retail Sales is 0.5% to BUY or SELL. If our deviation is hit, we can expect the market to move at least 50 pips within the hour, with a historical accuracy of 72%. We’ll be looking to BUY GBP/USD if we get a positive release, and SELL GBP/USD if we get a -1.0% or worse.

We’ll be looking for an after-news retracement trade for this release.

For more information on my trading methods, please read:
Henry Liu's Trading Method

The Market
With the current inflationary pressure in UK on the rise, a better than expected Retail Sales could add to the momentum of the longer-term view on GBP uptrend, despite of the consolidation we saw during the last 24 hours.

With MPC vote still split at 3-0-6, market will probably not oversell GBP. If GBPUSD were to drop significantly, there will be bargain buyers.

Additional Thoughts
GBP is possibly heading towards the 1.7000 level in the next few months, therefore it is already a “BUY ONLY” currency in my book. Any negative news will just mean that I’d buy in at a better price.

Pre-news Consideration
Since the forecast is at -0.5%, there will be no pre-news trading.

Historical Chart and Data for UK Retail Sales m/m


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