GBP/USD backs off from above 1.26 ahead of UK sales release

At 7am GMT the UK will release its latest retail sales report covering the month of January. Yesterday the Pound was rocked by the news that the UK economy had fallen into technical recession in Q4 2023. However, the GBP/USD did later recover, thanks to a wider drop back in the US dollar. So, the GBP/USD rose to test 1.26 and that is where it closed last night in the US. It tried to push higher earlier today, but so far it has stalled at 1.2605 ahead of that quite important UK sales data. We saw yesterday how sales in the US were impacted by the Christmas lag effect and cold weather and it could the first of those impacts UK January sales too. However, that is not what the markets are expecting this morning. The consensus is for UK sales to have bounced back from a 3.2% fall December. The markets expect sales to increase by around 1.5% in January. Meantime, it seems the pound is not too convinced by those calls. It is just now trading closer to session lows (1.2577), currently at 1.2582