The inability to hold Thursday’s gain is a negative sign and leaves the bias to the downside heading into next week.
UK retail sales volume fell 0.3% in January and the data for the second month running was much weaker than consensus forecasts which had called for a 0.9% increase on the month. The December data was revised to show a 2.1% decline compared with a 1.9% drop reported previously. There was a decline of 0.4% in the latest three-month period compared with the previous three months and annual growth slowed to 1.5% from 4.3% previously and this was the slowest rate of increase since November 2013.
With a failed test of the 20-day moving average now in place, GBP/USD is vulnerable to a drop to near term support at Wednesday’s low at 1.2383. Support below this low stands at the February 7 low at 1.2346, which corresponds to a 50% retracement of the advance from the January low to the early February intraday high.
In the US today, leading indicators for January are due at 10:00 ET.
GBP/USD Daily Chart