GBP/USD pierces below 1.2000 after strong US Retail Sales data

GBP/USD dives back closer to the weekly low and is pressured by a combination of factors.
The softer-than-expected UK CPI print weighs on the pair amid broad-based USD strength.
Bearish traders were further cheered by positive US Retail Sales data, which adds impetus to the downtrend.

Haresh Menghani FXStreet

The GBP/USD pair comes under intense selling pressure on Wednesday and extends the previous day's late pullback from over a one-week high. The downfall remains uninterrupted through the mid-European session and drags spot prices below the key 1.2000 psychological level in the last hour.

The British Pound weakens across the board in reaction to softer-than-expected UK consumer inflation figures. This comes on the back of a dovish assessment of the Bank of England's policy decision and suggests that the current rate-hiking cycle might be nearing the end. Apart from this, a strong follow-through buying around the US Dollar contributes to the GBP/USD pair's steep intraday decline of nearly 150 pips.

In fact, the USD Index, which tracks the Greenback against a basket of currencies, stands tall near a multi-week high amid expectations for further policy tightening by the Fed.

Bets were further lifted by the higher-than-expected US Retail Sales figures for January, which came out at 3% MoM, easily beating estimates of 1.8%.

This comes like fuel on the fire after reports of hawkish comments by several FOMC members on Tuesday.

Add to this, the prevalent risk-off mood - as depicted by a generally weaker tone around the equity markets - and it further underpins the safe-haven buck.

With the latest leg down, the GBP/USD pair reverses its weekly gains and seems poised to depreciate further.

From a technical perspective, the pair is in free fall with the next challenge coming into view, the technically significant 200-day SMA support, which is currently pegged near the 1.1935 region.

Overall, both the technical and fundamental backdrops favour bearish trades and suggests that the path of least resistance for spot prices is to the downside.

Technical levels to watch

GBP/USD

Overview
Today last price	1.2044
Today Daily Change	-0.0133
Today Daily Change %	-1.09
Today daily open	1.2177

Trends
Daily SMA20	1.2249
Daily SMA50	1.2186
Daily SMA100	1.1874
Daily SMA200	1.1943

Levels
Previous Daily High	1.227
Previous Daily Low	1.2118
Previous Weekly High	1.2194
Previous Weekly Low	1.1961
Previous Monthly High	1.2448
Previous Monthly Low	1.1841
Daily Fibonacci 38.2%	1.2212
Daily Fibonacci 61.8%	1.2176
Daily Pivot Point S1	1.2107
Daily Pivot Point S2	1.2036
Daily Pivot Point S3	1.1954
Daily Pivot Point R1	1.2259
Daily Pivot Point R2	1.234
Daily Pivot Point R3	1.2411

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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