GBP/USD extends losses below 1.3000 ahead of UK Retail Sales

GBP/USD drops to 1.2910 while heading into the London open on Thursday. The EU-UK tussle over post-Brexit trade deal as well as broad US dollar strength recently dragged the quote to the lowest in seven days. The Cable traders will now focus on the January month UK Retail Sales data for immediate direction.

While the EU’s chief Brexit negotiator Michel Barnier turned down the UK’s signal for the Canada-style trade deal with the region, he already knew that Tories will stand ready to criticize the move. Additionally, the Britons defied the EU diplomat’s demand to return the Elgin Marbles in the post-Brexit trade deal. At home, the opposition is doing all they can to turn down the “clueless” Home Secretary Priti Patel’s latest immigration plan while the EU is in the tension of the budget ahead of the first EU summit post-Brexit.

Over the counter, the US Dollar manages to keep the gains as not only the shift in risk sentiment but comparatively upbeat fundamentals also please the greenback lovers. China’s latest coronavirus numbers again surprised markets based on the re-revised methodology. Though, this doesn’t stop downbeat comments from the International Monetary Fund’s (IMF) Managing Director Kristalina Georgieva and rating giant S&P.

It should also be noted that a rate cut from the People’s Bank of China (PBOC) and Aussie employment data have earlier favored the USD. Further, the US 10-year treasury yields and Asian stocks are back to the red after rising the previous day.

The UK Retail Sales, expected to rise 0.7% versus 0.9% prior, will be closely watched to confirm the latest bullish bias following positive prints of inflation and employment data. On the other hand, the US Philadelphia Fed will also be the key as traders might want to confirm the greenback’s strength amid the coronavirus contagion.

Technical Analysis

A 15-week-old rising trendline, around 1.2885, can act as the immediate support ahead of aiming the 50% Fibonacci retracement of the pair’s October-December 2019 upside, at 1.2855. On the upside, a clear break of 50-day SMA level of 1.3060 enables the buyers to aim for the monthly high near 1.3070. It’s worth mentioning that the 1.3000 psychological magnet offers the immediate upside barrier.