- GBP/USD is moving lower for the third day in a row after an initial rally to the 1.3225 region.
- Disappointing UK retail sales data weighs on sterling amid some buying around the dollar.
- The Fed’s dovish outlook continues to act as a tailwind for the USD and puts pressure on the pair.
The pair GBP/USD extends its intraday decline during the first half of the European session on Friday and falls back near the previous day’s low around the 1.3160-1.3155 area.
After an initial rally to the 1.3225 zone, the GBP/USD pair found fresh selling on Friday and moved into negative territory for the third day in a row. Bank of England’s softer view on the need for further rate hikes acted as a headwind for sterling, which was further pressured by disappointing macroeconomic data from the UK.
In fact, the UK Office for National Statistics reported that monthly retail sales decreased 0.3% in February vs. market expectations of growth slowing to 0.6 from 1.9% in January. In addition, sales excluding fuel fell 0.7% during the reported month and also fell short of estimates for a 0.5% increase.
On the other hand, the US dollar trimmed some of its intraday losses and continued to find some support from expectations of a 50 basis point Fed rate hike at the May meeting. This was seen as another factor that put some downward pressure on the GBP/USD pair, with bears now waiting for a convincing break below trend channel support.
Sustained weakness below 1.3150 will mark a break of the bear flag pattern and pave the way for a slide to challenge the post BoE low around the 1.3090 region. Some continuation selling could drag the GBP/USD pair towards challenging the yearly low around the key psychological level of 1.3000 touched earlier this month.
GBP/USD technical levels
Source: Fx Street
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