GBP/USD struggles near multi-week lows, just above mid-1.2100s post-US retail sales

A sudden pickup in the US dollar demand pushed the GBP/USD pair to fresh seven-week lows, around mid-1.2100s in the last hour. The pair maintained its heavily offered tone and had a rather muted reaction to the US macro data.

The market sentiment remained fragile in the wake of growing fears about the second wave of coronavirus infections and fading hopes for a quick global economic recovery. The already weaker sentiment deteriorated further amid worsening US-China trade relations, especially after the US Commerce Department announced to bar Huawei from acquiring semiconductors and chipsets made using US software and technology.

The subsequent tweet by Hu Xijin, editor-in-chief of the Global Times, sent a clear message that China will be looking to respond. This, in turn, dented investors' appetite for riskier, which was evident from a fresh leg down in the equity markets and provided a goodish lift to the greenback's perceived safe-haven status. Resurgent USD demand was seen as one of the key factors behind the pair's sharp fall over the past hour or so.

The USD held steady following the release of US monthly Retail Sales report for April, which showed a worse-than-expected, 16.4% fall the headline figures. Adding to this, sales excluding autos plunged 17.2% during the reported month and the closely watched Retail Sales Control Group also recorded a steep decline of 15.3%.

Given that the market was already anticipating disastrous numbers on the back of nationwide lockdowns, the data did little to influence the USD price dynamics and provide any meaningful impetus to the GBP/USD major.

It will now be interesting to see if the pair is able to find any support at lower levels or continues with its ongoing bearish trajectory. It is worth mentioning that the pair has already confirmed a bearish break through the double-top neckline support near the 1.2300 mark and hence, remains vulnerable to slide further.

Technical levels to watch