GBP Slides As Retail Inflation Falls

UK Shop Prices FallBritish consumers will no doubt be cheering the latest data out of the UK today. The BRC shop price index was seen falling to 2.9% in January, down from 4.3% last month. At this level, shop price inflation is at its lowest point in 18-months. The BRC noted that the decline was heavily attributable to the significant discounts offered by retailers in hopes of attracting better volume over January.BOE on ThursdayOn the back of the hotter-than-forecast CPI reading for December, the data is an encouraging sign for January. The uptick in CPI over December saw the BOE warning that rates might yet have to rise further if inflation doesn’t continue lower. With the BOE due to meet later this week, traders are expecting the bank to reiterate this message, signalling that the fight against inflation is not yet over, reaffirming its willingness to do more if needed.  UK Growth in FocusAlong with the bank’s guidance on rates, traders will be keen to receive the latest inflation and growth forecasts from the bank which will be taken as a much firmer sign of likely policy action in coming months. Recession risks in the UK have been a key focus point recently and any sign that the BOE expects a slowdown this year will no doubt weigh on GBP near-term.Technical ViewsGBPUSDFor now, the market remains in a sideways range between 1.2612 and 1.2832 following the downside break of the bull channel. Momentum studies are softening, suggesting downside risks are building. Should we break below 1.2612, 1.2437 is the next support to note. To the topside, should we move back above 1.2832, 1.2992 will be the next target for bulls.