British retail sales were a huge disappointment: they dropped by 0.6% in January, contrary to expectations of a rise of 0.5%. This bad news came on top of a weaker figure for December: the volume of sales was revised from a drop of 0.1% to 0.3%.
GBP/USD reacted with a crash of 70 pips, and the move continues.
GBP/USD fell under 1.55 yesterday, and gradually managed to recover. The pair reached 1.5545 towards the publication of the retail sales.
The release sent it below yesterday’s lows, and it is trading at 1.5474 at the moment. These are the lowest levels since July 2012. Update: the fall extends as cable already fell to 1.5460.
The next significant level of support is only around 1.5350. For more, see the GBP/USD forecast.
The situation in the UK is not positive, to say the least. The central bank has a tough dilemma about policy, as inflation doesn’t let go. Perhaps the pound will wait for the end of the spring to bloom.
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