British pound falls to 6-month low, retail sales next

The British pound has lost ground on Thursday. In the North American session, GBP/USD is trading at 1.2506, down 0.44% on the day. Earlier, the pound dropped as low as 1.2593, its lowest level since mid-May.

It’s a busy Friday in the UK, highlighted by the retail sales report. We’ll also get a look at consumer confidence and the services and manufacturing PMIs.

The UK releases October retail sales on Friday and the markets are bracing for a downswing. The market estimate stands at 3.4% y/y, compared to 3.9% in September, the highest since Feb. 2022. Monthly, retail sales are expected to decline by 0.3%, following a 0.3% gain in September. The UK consumer remains in a sour mood, as the cost of living and high interest rates continue to squeeze households. The GfK consumer confidence index is expected to remain unchanged in November at -21.

The UK manufacturing sector has been struggling. The October PMI was revised downwards to 49.9, which indicates stagnation. The PMI has decelerated for three straight months and the weak global demand will likely continue to weigh on manufacturing in the months ahead. The market estimate for November stands at 50.0.

The services sector is in better shape and has shown 12 consecutive months of growth. The PMI has also eased for three straight months, raising concerns about the health of the economy. The market estimate for November is 52.0, unchanged from the October figure.

The US will also publish manufacturing and services PMIs on Friday, with little change expected. The Manufacturing PMI is expected to rise from 45.5 to 45.8, and the Services PMI, which has been showing solid growth, from 55 to 55.2.

• There is resistance at 1.2666 and 1.2702
• GBP/USD pushed below support at 1.2618 and tested support at 1.2582 earlier