Pound shrugs off dismal UK retail sales data

Technical Analysis

Author: Justin Low | gbpusd

Cable stays on the hunt towards 1.4000

The UK retail sales data was expected to be rather poor given lockdown in January but it came way off estimates, with the drop highlighting a rather stark drop in retail sales volume as well as compared to pre-pandemic levels; though not as bad as spring last year.

GBP/USD H1 19-02
Nonetheless, the pound has shrugged that off rather easily with cable barely budging as it keeps around 1.3970 levels as we get things going on the session.

If anything, that reaffirms the focus in the currency right now and that is but two things.

The first being the BOE shelving negative rates as an insurance policy. The second being that the market remains more forward-looking and is keeping with the optimism from the smoother vaccine rollout in the UK.

While economic conditions are relatively poor to start the year, the hope is that things will get better by the summer despite the post-Brexit challenge also weighing.

Looking back at cable, buyers are still very much poised in search of 1.4000 and they are helped by the break lower in EUR/GBP below its April lows of 0.8671-82.

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