Weak data and a somber Bank of England weighed heavily on the pound last week. British consumers were in a sour mood in November, as retail sales
Pound Slides to 1.30
The British pound had a dismal week, as the currency fell 2.5%, its worst weekly performance since October 2016. The post-election euphoria, which lifted the pound above the lofty 1.35 level, quickly dissipated, as the pound has coughed up most of the gains made in December and has fallen to the 1.30 line.
Weak British data and a somber Bank of England weighed heavily on the pound last week. British consumers were in a sour mood in November, as retail sales declined by 0.6 percent. This reading was much worse than expected, as the estimate stood at +0.3 percent. No less worrying, retail sales have failed to post gains since July.
The BoE maintained the benchmark rate at 0.75% last week, but was blunt in its concern over risks to the economy, stating: “If global growth fails to stabilize or Brexit uncertainties remain entrenched, monetary policy may need to reinforce the expected U.K. recovery.” Some rate-setters have voted in favor of lowering rates, and if the economy does not show signs of improvement early next year, the bank could lower rates in order to stimulate the economy.
Technical Analysis
GBP/USD continues to put pressure on the 1.3000 line, which is providing immediate support. Below, there is support at 1.2940, which has held firm since the first week of December. On the upside, we find resistance at 1.3050, followed by the round number of 1.3100.