The British pound sharply dropped to its lowest since 2020 after the UK released its retail sale numbers. The (GBP/USD) pair fell to its lowest of 1.2892 while EUR/GBP went up to its highest since April 10.
According to the Office of National Statistics, retail sales decreased by 1.4% on a month-month basis, leading to an annualized 0.9% growth. The two figures performed worse than the median estimates -0.3% and 2.8%, respectively.
In March, retail sales minus the volatile food and energy products dropped by 1.15, worse than the -0.4% prediction.
Moreover, data by Markit indicated deteriorating services and manufacturing industries. The manufacturing PMI fell to 55.3, while the services PMI dropped from 62.6 in March to 58.3 in April; hence, the composite PMI fell to 57.6. the two industries are performing well still since they have surpassed the 50.0 expansion zone.
Hence, the GBP/USD pair dropped significantly since analysts predicted a halt in rate hikes by the Bank of England (BOE). The bank has already implemented rate hikes thrice, and analysts forecast more to come.
Additionally, the GBP/USD price fell due to Jerome Powell’s, the Fed Chair’s hawkish tone. At an IMF summit on Thursday, he announced that the bank would keep implementing its tightening policy in May, including a 0.50% hike and quantitative tightening.
The GBP/USD price has been in a downward trend for a while. Along the way, the pair has been forming a descending triangle pattern that is shown in yellow. Historically, this triangle pattern is usually a bearish signal. The pair declined below the lower side of the descending triangle. It has also moved below the 25-day and 50-day moving averages and dropped to 1.2900 as I had predicted. Therefore, the pair will likely keep falling as bears target the next key support at 1.2800.