EURGBP TECHS: Solid Friday Close, But More Progress Needed

• RES 4: 0.8494 High Aug 26 ‘24        
• RES 3: 0.8474 High Jan 20 and a key resistance
• RES 2: 0.8428/8450 High Mar 18 / 11 and the bull trigger
• RES 1: 0.8395 High Mar 24 and a key near-term resistance       
• PRICE: 0.8376 @ 16:51 BST Apr 2 
• SUP 1: 0.8316 Low Mar 28 and a key near-term support 
• SUP 2: 0.8291 76.4% retracement of the Mar 3 - 11 bull leg
• SUP 3: 0.8251 Low Mar 4  
• SUP 4: 0.8241 Low Mar 3 and a bear trigger

EURGBP is trading above last week’s low. The bear leg that started Mar 11 appears corrective and has allowed an overbought condition to unwind. MA studies are in a bull-mode position, highlighting a dominant uptrend. Support to watch is 0.8316, the Mar 28 low. A break of this level would signal scope for a deeper retracement and open 0.8290, a Fibonacci retracement. For bulls, clearance of  0.8395, the Mar 24 high, would be a bullish development.     

The National Retail Federation (NRF) forecasts core retail sales growth of between 2.7-3.7% in 2025 (ex-auto dealers, gas stations, restaurants). That wide fairly wide range would either represent steadiness (at the high end) with the 3.6% in 2024 - which was exactly in line with the pre-pandemic annual average (2010-2019) - or, at the low end, marking a notable slowdown to the weakest since 2016. The 2024 outturn was in line with their forecast.

• Much of the 2025 outturn will depend on the performance of the economy of course: the NRF forecasts GDP growth of just under 2% this year, vs 2.8% in 2024. They also expect PCE inflation to remain steady, at 2.5% for the year, despite the imposition of tariffs. Both of those figures look optimistic versus consensus at this stage.
• While the NRF recognizes the potential impact from tariffs ("We have factored higher inflation, slower job growth and slower economic activity into our modeling. The significant policy uncertainty from numerous factors is implied by the range of our forecast."), NRF Chief Economist Jack Kleinhenz notes: “It’s the hard data on employment, income and tariff-induced inflation — not consumer sentiment — that supports our view of a slower trajectory for consumer spending...consumer fundamentals remain intact, supported by low unemployment, slower but steady income growth, and solid household finances. Consumer spending is not unraveling".
• As we've noted, the "hard" retail data have remained solid even as sentiment has collapsed in recent months.

Wednesday's Europe rates/bond options flow included: 

• OEK5 118.00/118.50cs sold at 22.5 in 10k
• ERJ5 with ERK5 97.75/97.6875ps vs 98.00c, bought the ps strip for half in 2k
• SFIZ5 96.75/97.25cs, bought for 3.75 in 2k
• SFIZ5 96.20/96.30cs vs 95.75/95.65ps, bought the cs for 2 in 2.5k