Sterling fell back over weak retail sales in December. A sharp fall below the previous swing low at 0.8770 has put the bulls on the defensive. The single currency is resting on 0.8720 at the base of the bullish breakout in late December. Sentiment has grown cautious and the sideways action may end soon in a breakout. A hold above this critical floor would challenge 0.8800 where a breakout could help the pair recover to 0.8880. Failing that, a bearish turn would trigger a new round of sell-off and send the pair to 0.8650.