GBP/USD: the pound hits new annual lows versus the dollar despite strong UK retail sales

Last month's UK Retail Sales data proved to be very strong, with a gain of +1% versus +0.8% expected, but the currency failed to take advantage of this, and eventually continued to fall, bringing the pair to a new annual low of 1.2849. The GBP/USD pair is currently trading at 1.2889.

Despite the positive data this week, there are still few indications that recent developments will see a major reversal in BOE sentiment. What the pound needs is more consistent data such as this week's in the coming weeks for the market to push back its rate cut expectations.

And in this regard, that's where optimism is lacking at the moment. It should also be noted that the pound will still be subject to the influence of PMIs today to end the week.

Nor should it be forgotten that there are difficult trade negotiations underway with the EU under Brexit, which limits any rebound in the GBP.

From a technical point of view, the break below the 100-day moving average is a key bearish signal that could suggest a continuation of the downtrend. In this context, the psychological threshold of 1.28 will be the first important target.

On the upside, a return above 1.29 and the 100-day moving average at 1.2917 seems necessary to alleviate the bearish bias, but we can only risk betting on a lasting upward turnaround if the key psychological threshold of 1.30 is broken through in the context of a rise.

Currently, the GBP/USD pair is trading at 1.2889 on the forex.

Daily GBP/USD chart