GBP/USD forecast, Oil forecast: Two trades to watch

GBP/USD falls after retail sales fall, PMI data up next

GBP/USD is falling, snapping a three-day winning streak amid a stronger U.S. dollar and as investors digest disappointing retail sales data.

Retail sales fell -0.9% MoM in March, down from 1.2% rise in February and a steeper decline than the 0.5% forecast. Weaker sales come as inflation remains in double digits and interest rates high, squeezing households’ income.

However, it's not all bad news the JFK consumer confidence survey showed that consumer morale was at the highest level since February last year, and consumers took a more positive view of their finances and the health of the broader economy. This could suggest that the green shoots of recovery are starting to emerge.

Attention now turns to UK PMI data which is expected to show that the dominant service sector grew again in April at 52.9. Stronger growth could be considered inflationary and lift GBP.

Meanwhile, the USD is rising, recovering from losses yesterday after weak data fueled recession fears. Hawkish Fed speak continues to support the greenback. Cleveland Fed President Loretta Mester said that rates need to rise above 5% and stay there to tame inflation.

US PMI data is also due. The services PMI is expected to grow at a slightly slower pace of 51.6 in April from 52.6. Manufacturing PMI is forecast to slow to 49 from 49.2.

Where next for GBP/USD?

GBPUSD continues to trade in a tight range between 1.24 to 1.25 which remains a significant resistance barrier. The pair has fallen below the month-old rising trendline, which, together with the bearish crossover on the MACD keeps sellers hopeful of further downside.

Sellers will be looking for a break below 1.2350 the weekly low to open the door to 1.2275 the April low.

Meanwhile, buyers could look for a rise above rising trendline resistance at 1.25 to bring 1.2545 the 2023 high into play. Beyond here 1.26 round number comes into target.

Oil falls to a 3-week low as recession fear rise

Oil prices are heading lower, falling to a three-week low, and are set to lose 6% across the week after four straight weeks of gains.

Oil prices have reversed a large part of the strong gains made after APEC plus unexpectedly cut supply.

Signs that central banks will continue raising interest rates and concerns that this will slow economic growth are hurting the oil demand outlook.

Weaker-than-expected regional manufacturing data and signs of weakness seeping into the US labour market are fueling recession worries. At the same time, Federal Reserve officials are calling for further rate hikes.

The USD has recovered from a 15-month low. The stronger USD makes oil more expensive for buyers of foreign currencies.

Where next for WTI oil prices?

After running into resistance at the 200 sma, WTI oil price has fallen below 80.00 and is currently testing support of the 100 & 50 sma. The bearish crossover on the MACD plus the RSI below 50 keeps sellers hopeful of further downside.

A break below the 100 & 50 sma 76.90 and 76.50 is needed to extend the selloff towards 72.00 the lower band of the horizontal pattern that the price has traded within since the end of last year.

Should buyers defend the 100 & 50 sma supports buyers will look to retake 80.00 the physiological level and 82.40 the 200 sma.