GBP/USD flirts with one-month lows, 1.3600 mark remains in sight

The GBP/USD pair maintained its offered tone following the disappointing release of UK macro data and was last seen trading near one-month lows, around the 1.3615 region.

The pair extended the previous day's bearish breakdown momentum and continued losing ground through the first half of the trading action on the last day of the week. This marked the second consecutive day of a negative move – also the fourth in the previous five – and was sponsored by a combination of factors.

Persistent COVID-19 jitters, along with expectations that the Fed will begin tapering its asset purchases later this year continued denting investors' appetite for perceived riskier assets. This, in turn, benefitted the US dollar's relative safe-haven status and exerted some downward pressure on the GBP/USD pair.

The British pound was further weighed down by weaker than expected UK monthly Retail Sales figures, which fell 2.5% in July as against market expectations for a modest 0.4% growth. Moreover, sales excluding fuel also fell short of estimates and declined by 2.4% MoM, while readings for June was revised lower.

This comes on the back of worries that job losses in the UK will rise after the furlough scheme ends in September and Wednesday's softer UK consumer inflation figures. This now seemed to have dashed hopes for a rate hike from the Bank of England in the near term and was seen as a key factor that undermined the sterling.

In the absence of any major market-moving economic releases from the US, the prospects for the Fed rolling back its pandemic-era stimulus favours USD bulls. This, in turn, suggests that the path of least resistance for the GBP/USD pair remains to the downside, warranting caution before positioning for any recovery.

Technical levels to watch