Short-Covering Could Set GBP USD to 1.6117

News that U.K. Retail Sales rose to their highest level in five monthsis helping to support the GBP USD this morning.  A report showing theeconomy contracted less than expected during the second quarter isproviding additional support.

News that U.K. Retail Sales rose to their highest level in five months is helping to support the GBP USD this morning.  A report showing the economy contracted less than expected during the second quarter is providing additional support. 

Short traders are reacting to the better than expected news by covering positions.  These two reports should not be perceived as position changing reports.  The overall U.K. economy remains fragile as evidenced by the Bank of England’s unanimous decision on September 10th to keep its stimulus plan intact.

Based on the short-term range of 1.6467 to 1.5768, the charts indicate that a retracement to 1.6117 to 1.6200 should be expected before fresh sellers arrive.