Sterling and Euro are riding on a bull trend against the greenback as UK is likely to move closer to a Brexit deal with EU and the recent ECB meeting signalled strength in the region’s economic growth.

Strong UK retail sales figures gave the pound another boost, with both MoM and YoY growth smashing market forecast. The Office of National Statistics explained that the data is part of the result of store prices “stabilising” after almost two years of rising inflation that had depressed the value and volume of goods that consumers are willing to buy. Surprisingly strong retail figures underpinned the strength of household spending, which is viewed as a leading indicator of economic growth and inflation.

Technically, GBP/USD is in a clear bull trend with both SuperTrend (10,2) and 10-Day SMA sloped upwards. Fibonacci Extension suggests more upside toward the next resistance levels at 1.326 (127.2% Fibonacci Extension) and 1.340 (161.8% Extension) respectively. EUR/USD is testing a strong resistance level at around 1.171 area and a successful breakout above this level will open the room for more upsides towards 1.180 (61.8% Fibonacci Extension) and 1.187 (78.6% Extension) areas.

Economic Calendar – Retail Sales YoY (UK)

US Dollar Index slumped to 93.4 area - the lowest level seen since June. Weaker dollar boosted gold and silver prices and will likely extend the relief rally in emerging markets, including HK and Singapore. Singapore’sSTI opened 0.8%, or 25 points higher at opening, following a strong US session last night. Sector wise, banks (DBS), consumer (ThaiBev), offshore & marine (Keppel Corp) and Information technology (Venture) were leading the gain among blue chips.

Local investors shrugged off trade concerns as data suggests that trade risk is more of a 2019 thing. Meanwhile, the impending 25% tariff on bulk Chinese imports actually catalystsmore trading activities between US and China as importers are trying to build up inventory before the holiday season. The fourth quarter this year might be a busy season for China’s manufacturers.

GBP/USD

By Margaret Yang in Singapore

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