UK Retail Sales should be a good release and similarly to the CPI scheduled earlier this week a strong surprise will surely drive the market for at least a couple of hours, depending on the degree of surprise, of course.
Considering recent economic pressure and uncertainty from “Brexit”, especially looking at past 6 Retail Sales of which 20% met expectation and 50% missed forecast horribly (3 worse than, 1 as expected, and 2 better than expected), today’s release could once again surprise…
4:30am (NY Time) UK Retail Sales Forecast 1.2% Previous -1.8%
DEVIATION: 0.5% (BUY GBP 1.7% / SELL GBP 0.7%)
The Trade Plan
The monthly retail sales report is a direct measurement of consumer activities at the retail level. A higher release is generally good for the economy, and better for it’s currency; a lower release is considered negative for the economy and not good for it´s currency.
Our tradable deviation or surprise factor for UK Retail Sales is 0.5%. If our deviation is hit, we can expect the market to move at least 50 pips within the hour; of course, considering that we are expecting a 1.2% figure, I would recommend to BUY only if the figure is at least positive at 1.7% or better, and SELL only if the figure is below 0.7%.
We´ll be looking for an after-news retracement trade for this release. For more information on my trading methods: https://www.currencynewstrading.com/how-to-get-started-with-news-trading/
I’d recommend to use the Recommended Pairs from above as they are based on my CSM, which should provide the best combination of currency pairs to trade based on better/worse news… of course, you can also trade the default pair: GBPUSD.
Outlook score is derived from market sentiment, focus, and economic indicators for the currency. It represents the long-term trend of the currency and its market perception. In short, a strong Outlook Score means more long-term demand for the currency, and a weak Outlook Score is the opposite.
UK Retail Sales measures the value of sales at the retail level. A rising trend has a positive effect on the nation’s currency because Retail Sales make up a large portion of consumer spending, which is a major driver of the economy and has a sizable impact on GDP. Traders payclose attention to Retail Sales because it is usually the first significant indicator of the month that relates to consumer behavior and is susceptible to surprises.