GBP/USD turns lower for the third straight day, slides back closer to mid-1.3100s

• GBP/USD turned lower for the third straight day following the early uptick to the 1.3225 region.
• Disappointing UK Retail Sales data weighed on sterling amid the emergence of some USD buying.
• The Fed’s hawkish outlook continued acting as a tailwind for the greenback and exerted pressure.

The GBP/USD pair extended its intraday descent through the first half of the European session and dropped back closer to the overnight low, around the 1.3160-1.3155 area in the last hour.

Following an early uptick to the 1.3225 area, the GBP/USD pair met with a fresh supply on Friday and drifted into the negative territory for the third successive day. The Bank of England's softer view on the need for further rate hikes acted as a headwind for the British pound, which was further pressured by the disappointing UK macro data.

In fact, the UK Office for National Statistics reported that monthly Retail Sales declined by 0.3% in February as against market expectations for a deceleration in growth to 0.6 from the 1.9% in January. Adding to this, sales excluding fuel fell 0.7% during the reported month and also missed consensus estimates pointing to a 0.5% increase.

On the other hand, the US dollar trimmed a part of its intraday losses and continued drawing some support from rising bets for a 50 bps Fed rate hike at the May meeting. This was seen as another factor that exerted some downward pressure on the GBP/USD pair, with bears now awaiting a convincing break below the ascending trend-channel support.

Sustained weakness below mid-1.3100s will mark a breakdown through the bearish flag pattern and pave the way for a slide towards challenging the post-BoE low, around the 1.3090 region. Some follow-through selling could drag the GBP/USD pair further towards challenging the YTD low, around the key 1.3000 psychological mark touched earlier this month.

Technical levels to watch