Today, market participants are waiting for the following UK and US macro-economic news: British consumer price index for March and American retail sales data for March will become known.
British consumer price index, (being the main inflation indicator in the country and also the index that affects retail prices for a certain “basket” of goods and services), does not satisfy investors. Since the last December British economy is at the verge of deflation. It is expected that in March this index will remain at the level of 0.0% on annual basis and will drop from 0.3% to 0.2% on the monthly basis. Therefore, target inflation level, set by the Bank of England in order to change interest rate, has not been achieved. If today’s forecast proves to be correct, pressure on the Pound will increase and the GBP can weaken against major counterparts.
In addition, American retail sales statistics for March will be made public. According to experts’ optimistic forecast, this index will grow by 1.1% after three-month decline. It is also expected that this index will grow by 0.7 excluding such the variable component, as the car sales. Note, however, that in the past three months this index has been below the forecast, which demonstrates negative attitude of the American consumer to the national economy. If the forecast is correct, the USD can significantly grow.
Based on the fundamental factors, we can expect that the American currency will strengthen versus major currencies. The price of GBP/USD can fall to 1.4600 and 1.4565. However, in case of the negative data on American retail sales, the price can go up to 1.4685 and 1.4750.