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UK flash PMIs will recover further as the economy reopens; Upcoming Retail Sales – Forex News Preview

By on April 21, 2021 0

UK flash PMIs will recover further as the economy reopens; Upcoming Retail Sales – Forex News Preview

Melina Deltas, XM Investments Research Office

The latest batch of UK data will hit the markets on Friday. Retail sales will be released at 06:00 GMT ahead of Markit’s flash PMIs at 08:30 GMT, which are expected to improve as lockdown restrictions have been eased. After being weighed down by vaccine-related issues, the pound is on a more solid footing as the UK economy slowly reopens. Friday’s bullish data could further strengthen the pound’s rebound.

Long road to recovery

The Markit Services PMI is expected to rise to 59.0 in April from 56.3 previously, remaining above the 50 level, supported by an increase in the total number of new jobs for the first time in six months after the relaxation of foreclosure measures. The manufacturing PMI is also expected to have risen to 59.0, which remains a high figure supported by stronger demand for expansion in factory activity since February 2011.

March retail sales which are due ahead of the PMI release will likely confirm a weaker figure. Retail sales growth is expected to have declined to 1.5% on a monthly basis in March from 2.1% previously, which seems natural as foreclosure restrictions remained in place during the month and did not ease. that at the beginning of April. Hospitality businesses, such as restaurants and pubs, were allowed to serve people only outdoors. On an annual basis, retail sales are expected to have jumped to 3.5% after contracting -3.7% previously.

All eyes on vaccination

More than 33 million people in the UK have received at least one dose of the Covid-19 vaccine, while more than 10 million have been inoculated with the second dose, according to the latest government figures.

However, vaccine supply issues delayed the rollout in April. But if supply issues are resolved and the UK can continue its vaccination program at a good pace, expectations of a stronger recovery should continue to strengthen and the pound may continue to dominate its currency partners. .

Cable battles with 1.40

Coupled with a weaker dollar, cable is currently experiencing another pop in the 1.4000 level since the start of the week. If the greenback remains under selling pressure, a convincing breakout above the psychological level of 1.4000 is possible in the near term. Above this handle, the next key levels that could be targeted are the Peak of 1.4235 over 35 months, followed by the 1.4345 barrier, recorded in January 2018.

However, if the dollar tries to rebound again or the fallout from the UK virus unexpectedly worsens again, the GBPUSD could initially fall towards the 1.3670 support, below the rising line before testing the 23.6% Fibonacci retracement level of the rising leg from 1.1405 to 1.4235 to 1.3570 ahead of the 200 day SMA which is slightly below support from 1.3435.

With the UK now outside the EU, the economy is more exposed than ever to global risks and getting everyone vaccinated may just be part of the solution to getting the country back on track. foot.