GBP/USD Threatening to Drop Below 1.36, UK Retail Sales Drop Unexpectedly
GBP Analysis & News
- GBP/USD threatening to fall below 1.36, Fibonacci support in sight
- Retail sales drop 2.5% in July, bringing the yearly figure down almost 7 percentage points
The GBP selloff continues this morning with GBP/USD threatening to break below 1.36 after dropping 0.9% on Thursday. The pair has been struggling to keep the momentum going for the past three months after it got rejected for a second time this year at 1.4250 on June 1st. If the 1.36 mark is breached, the first support to come into play is 23.6% Fibonacci retracement (1.3577), which was key at stopping the bearish pressure a month ago. A fall below this area would see a new 6-month low for GBP/USD, with 1.35 likely to be the next goal in sight for sellers.
GBP/USD Daily Chart
The broader sentiment in the market remains pretty risk-off as concerns about growth and the delta variant become more prominent. Despite vaccine rollouts being pretty advanced in most developed countries, we have no reference as to what impact a new wave of covid may have on the market under this situation, as lockdown measures continue to be implemented in some regions despite high vaccination rates, which has increased concerns about new restrictions once the summer ends.
Elsewhere, UK retail sales data was released this morning, painting a pretty grim picture about consumer spending in the month of July. Month on month sales were down 2.5%, when economists were expecting a modest 0.4% rise. Year on year sales are now at 2.4%, down from 9.2% in June and way below forecasts of 6%.
--- Written by Daniela Sabin Hathorn, Market Analyst
Follow Daniela on Twitter @HathornSabin
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