One should remember that there are two prices in the market: the price of sellers (Ask) and the price of buyers (Bid).
The chart shows the Bid price. Sell orders are executed at the Bid price; Buy orders are executed at the Ask price.
Consequently, short (Sell) positions are opened at the Bid price and closed at the Ask price. Long (Buy) positions are opened at the Ask price and closed at the Bid price.
For your short position (Sell), the Stop Loss order is set at the price of 1.2970. The price on the chart reached 1.2968, but that’s the Bid price.
Given the spread of 2 points at that moment, the Ask price was 1.2970 (i.e. Ask = Bid + Spread = 1.2968 +0.0002 = 1.2970), your position was closed, because Stop Loss orders for short positions are executed at the Ask price.
In this case, the Stop Loss order was executed correctly, because the Ask price reached the level specified in the order.