The pound sterling is likely to end the trading week with gains due to better-than-expected economic statistics. Besides, the fact that investors are awaiting the news on Brexit contributes to the currency's growth.
The data on UK retail sales turned out to be much better than expected.
Despite a rise in COVID-19 infections, UK retail sales growth accelerated to 5.8% from 4.6%, while economists predicted an increase of 4.0%. Supported by the recent surge in inflation, this news is expected to encourage market participants as UK companies are enjoying revenue growth.
Nevertheless, investor optimism remains subdued as talks over a post-Brexit trade deal were suspended on Thursday after an EU negotiator tested positive for the coronavirus. EU leaders were expected to demand the launch of an emergency no-deal plan from the European Commission in case the agreement is not reached today.
Meanwhile, there were reports that the agreement could be concluded as early as Monday.
From a technical point of view, the pound/dollar pair has gained ground, once again reaching the 1.3285 mark. However, the level of 1.3300 acts as resistance, which may lead to a reduction in long positions and consequently the price rebound downwards to the level of 1.3235.
If the price goes up, its movement will be limited by the resistance level of 1.3300. In order to change direction, the price needs to consolidate above 1.3320 on the four-hour chart.
As for the euro/dollar pair, it can be clearly seen that when the price touched the 1.1890 area, bulls became reluctant to enter long positions. As a result, the price pulled back.
The euro/dollar pair is likely to continue its downward movement towards the levels of 1.1850-1.1820.