British retail sales surpassed forecasts, adding to a string of expectations-beating data, but the sterling outlook is once again succumbing to EU-UK trade uncertainties.
GBP/USD remains offered, trading at 1.2875 slightly above new 2020 lows at 1.2849.
Traders are focused on a potential impasse over EU supervision of so-called level playing field issues, after UK's David Frost said giving up control on this would contradict the point of Brexit nL8N2AH4IE.
EU-UK trade and China virus uncertainties could trump incremental UK data beats and keep the BoE on dovish hold.
BOEWATCH on Eikon shows a near 80% chance for a UK rate cut by December 2020 and a fairly flat short-sterling curve over the next few years.
While the U.S. Eurodollar curve shows nearly two Fed cuts by March 2021, which may benefit GBP/USD, no-deal Brexit fears and the large U.S. rate advantage should mute sterling gains.
Bulls need to regain the 55-DMA at 1.3062, but remain at a disadvantage below the Jan. 31 high at 1.3210.
Bears remain in control, eyeing support at 1.2822, the Nov. 22 low, and 1.2769, the Nov.
More firm support comes at 1.2694, the 200-DMA.
GBP Chart: Click here