A fresh batch of UK statistics sets the mood that the local rebound might be temporary. The economy added 0.1% in February compared to 0.8% a month earlier and was twice as weak as expected. Industrial production fell by 0.6% compared to an expected 0.3% increase. This demonstrates the damage to business activity in sectors that are often one step ahead of the economic cycle.
A sharp slowdown in the economy will reduce the room for monetary policy tightening by the Bank of England.
The decline in stock markets also plays into the hands of pound sellers, which positively correlates with demand for risky assets. GBPUSD went into a spike on events around Ukraine, losing more than 4.5% from late February to the lows of March. The subsequent rebound failed to gain traction, stalling near the 61.8% level of the initial decline. A consolidation under 1.3000 potentially paves the way to 1.26 (161.8% level).