GBP/USD was in the red earlier on Friday after a decline in the UK retail sales. The pair was trading lower at $1.3624.
UK Retail Sales
According to data published by the Office for National Statistics (ONS), retail sales volumes dipped 2.5% MoM in July. They were weaker than the estimated 0.4% increase. However, they were 5.2% more compared to the three months to July. They were also 5.8% higher than the pre-pandemic levels in February 2020.
Core retail sales for the same month fell 2.4%, down from a 0.3% increase in June. On a year-on-year basis, the retail sales came in lower at 1.8%, while the core retail sales came in at 2.4%.
Food store sales volumes fell 1.5% in July 2021, declining from the previous month’s increase when sales were boosted by the start of the Euro 2020 football championship. Non-food stores reported a 4.4% fall in sales volume compared with June 2021. Second-hand goods stores and computer and telecom equipment stores led the drags in the sales volumes.
Automotive fuel sales volume snapped from their 5-month winning streak in July. The sales fell 2.9% over the month, the first fall since February 2021. Online retail sales increased to 27.9% in July, up from 27.1% in June. Online sales remain substantially higher than the pre-pandemic levels.
GBP/USD Technical Analysis
The daily chart indicates that the GBP/USD pair has been on a negative momentum. The pair hit an intraday high of $1.3644 before pulling back.
The GBP/USD pair is trading below the 25 and 50-day exponential moving averages, reinforcing its weakness. Its Relative Strength Index (RSI) has also been edging lower. At 34, its RSI is 4 points above the oversold region, hinting at further negativity in the pattern.
Therefore, further weakness will be demonstrated once the pair moves past the support at $1.35690. On the flip side, a move above the 50-day EMA will invalidate this view, making the resistance at $1.400 a suitable target.