Pound Sterling dropped after data showed that UK Retail Sales declined
The Pound Sterling (GBP) retreated after the UK Office for National Statistics (ONS) reported weak Retail Sales data for September. UK households have postponed their demand for core goods as higher borrowing costs and stubborn inflation have squeezed their spending power. The GBP/USD pair has been exposed to more downside as declined consumer spending indicates that the overall demand will remain vulnerable, which would force UK firms to scale down their operating capacity further.
The consequences of a slowdown in the retail demand would be borne by producers and job-seekers as weak consumer spending could result in lower production by firms and henceforth soft demand for labor. For Bank of England (BoE) policymakers, poor retail demand cuts consumer inflation expectations significantly and cools the economy. This would allow the BoE to extend the rate pause to the November monetary policy meeting. After the release of the Retail Sales, data, BoE Governor Andrew Bailey, in an interview with Belfast Telegraph, remained confident over a market fall in inflation next month. Next week, the release of the Employment data will provide more cues about BoE's policy in November.
Pound Sterling drops sharply after weak Retail Sales data. The GBP/USD pair falls toward a two-week low at 1.2110. The broader Cable outlook is vulnerable as it faced immense selling pressure while attempting to cross the 20-day Exponential Moving Average (EMA) on the upside. Momentum oscillators have shifted into the bearish range, warranting more downside. A further breakdown could drag the GBP/USD pair toward the psychological support of 1.2000.
Pound Sterling drops sharply after weak Retail Sales data. The GBP/USD pair falls toward a two-week low at 1.2110. The broader Cable outlook is vulnerable as it faced immense selling pressure while attempting to cross the 20-day Exponential Moving Average (EMA) on the upside. Momentum oscillators have shifted into the bearish range, warranting more downside. A further breakdown could drag the GBP/USD pair toward the psychological support of 1.2000.