Pound Sterling remains technically driven as not even an annualised growth of 6.2% in UK retail sales was able to stem the currency's losses.
The UK was the second-worst performing currency amongst the world's top 10 grouping of currencies.
The GBP/EUR's rejection at the 1.20 ceiling suggests fresh entrants are looking to target a decline down to 1.1550/1.16 again.
The failure at 1.34 for GBP/USD - the third in three months - suggests falls down to 1.30, and then 1.2850 are now possible.
Markets appear convinced the Bank of England will cut interest rates again in November - despite evidence that UK consumers continue to dig into their wallets and spend.
On Thursday the ONS reported month-on-month retail sales declined 0.2% between July and August with non-food stores contributing the biggest decline.
However, the data did beat expectations for a decline of 0.4%, and this should have helped Pound Sterling remain supported against the Euro and US Dollar.
The August release was revised higher to 1.9% from 1.4% - these were the best data from the sector since 2014 - and came despite the Brexit vote that was cast a mere few weeks prior.
As a result, annualised retail sales growth now stands at a whopping 6.2%, in short UK consumers remain resolutely unperturbed by the Brexit vote.
"Despite August’s dip in UK retail sales, spending on the high street is still going gangbusters, although some moderation will surely occur over the next few quarters," says Paul Hollingsworth at Capital Economics.
Looking ahead Hollingsworth says there are likely to be a number of headwinds, such as slower growth in employment and real earnings and lower confidence.
"That said, low interest rates and a likely easing in the fiscal squeeze at the Autumn Statement later this year should help offset some of these effects. Accordingly, we expect growth in household spending to only slow from about 2.7% in 2016 to around 1.5% in 2017," says Hollingsworth.
Two Analysts Who are Staying Bullish on Sterling
Sterling fell sharply following the release of inflation data on Tuesday the 13th September.
The data was hardly dramatic but it did serve to refocus minds on the Bank of England with many now expecting another round of interest rate cuts and asset purchase announcements to come at the November meeting.
It is the threat of action that should see the GBP strength remain capped.
While wage and earnings data released in the mid-week session was decent there is the sense that only materially better-than-forecast data will push Sterling out of its recent ranges.
Nevertheless, analysts tells us that the Pound actually remains quite constructive against the Dollar and Euro
“The GBP/USD held ground at 1.3179 despite the Bank of England’s dovish stance at yesterday’s MPC meeting. Cable will step in the short-term bullish consolidation zone above 1.3255 (major 38.2% retracement on Sep 6th - Sep 14th decline), says Ipek Ozkardeskaya at London Capital Group who argues the mid-term recovery should allow the GBP/USD to advance toward 1.3642.
This level is the major 38.2% retracement on post-Brexit sell-off below which the mid-term trend remains bearish.
With regards to the GBP/EUR, Lloyds Bank still view the move lower from this week’s 1.20 high as being corrective with analysts expecting the pair to now develop a higher low in the 1.1709-1.1574 region.
A break above 1.18 and then 1.1876 would add conviction to the view that the trend remains higher.
A break-up below 1.1574 and then 1.1468 would negate the current bullish outlook and risk a move towards 1.11-1.0870, especially if GBPUSD is breaking 1.2800 support.
UK to Avoid Recession
The strong retail sales reading greatly diminishes the prospects of the UK falling into a post-Brexit vote recession.
"UK retail sales were robust in August and have shown no adverse effects from the UK vote to leave the EU. While we had expected the consumer to be relatively resilient, it has been stronger than we had expected and the risks to our 3Q16 GDP growth forecast of 0.0% qoq are now firmly to the upside," says Daniel Vernazza at UniCredit Bank in London.
Monthly retail sales figures are very volatile, but Vernazza now has two months of post-referendum sales and he sees no signs of weakness following the UK vote to leave the EU.
Indeed, the less volatile 3-month-on-3-month (3M/3M) growth of sales was 1.6% in the three months to August, which is very strong and matches the rate in the three months to June.
"Retail sales are important for two reasons: first, they are a useful predictor of services growth, which accounts for around 80% of output using the output-based approach to measuring GDP. Second, they directly enter consumption using the expenditure-based approach to measuring GDP," says Vernazza.