GBP/USD struggles near 1-month lows, but holds above 1.2800 handle

   •  Disappointing US macro data prompts some USD weakness and helped ease bearish pressure.
   •  Traders still seemed reluctant to place aggressive bets ahead of Brexit debate in UK Parliament.

The GBP/USD pair failed to capitalize on the dismal US macro data-led bounce and remained within striking distance of one-month lows set earlier today.

The US Dollar took a sharp knock and tumbled across the board in reaction to a big disappointment from the US monthly retail sales figures for December (delayed due to the government shutdown). 

In fact, headline retail sales declined 1.2% m/m - the biggest drop since 2009, and the closely watched Retail Sales Control Group recorded its biggest monthly drop ever, falling 1.7% on a monthly basis. 

This coupled with an unexpected jump in the initial weekly jobless claims and mixed PPI report exerted some additional pressure on the buck, and turned out to be a key factor behind the pair's goodish bounce in the last hour.

The uptick, however, lacked any strong conviction amid persistent Brexit uncertainty, especially after the news that the pro-Brexit ERG has decided to abstain in today's votes in Parliament and set the stage for a government defeat. 

Technical outlook

Mario Blascak, FXStreet's own European Chief Analyst writes: “The technical oscillators like the Relative Strength Index (RSI) and Momentum are flat in the neutral territory while Slow Stochastics fell into the Oversold territory. The GBP/USD is sitting at the 1.2820 level representing a 50-DMA on a daily chart with a break below that level targeting 1.2800-1.2750 thereafter. The 1.2883 representing a 100-DMA is resistance on the upside.”