GBPUSD dropped below 1.30 today, for the first time since November 2020. The pair took a hit this morning following the release of UK retail sales data for March. Report turned out to be much worse than expected with retail sales increasing just 0.9% on a year-over-year basis (exp. 2.8% YoY). On a month-over-month basis retail sales were 1.4% lower in March. Report hinted that the UK consumer is weakening and inflation running rampant may be to blame. However, this is not the end of the release from the UK today. Investors will also get an update on moods among companies with the release of UK flash PMIs for April at 9:30 am BST. Both indices – manufacturing and services – are expected to weaken compared to previous month. Nevertheless they are expected to stay well above 50 points, signaling that expansion is still underway.
Taking a look at GBPUSD chart at D1 interval, we can see that the pair has been trading in a downtrend since mid-2021. Pair plunged through the support zone ranging around 1.30 handle this morning and continued to freefall. GBPUSD nears a test of the 1.29 area. However, there is still plenty of room to deepen declines as the first near-term support to watch can be found at 50% retracement of the post-pandemic recovery move in the 1.2840 area.