- The GBP/USD is down slightly today after a series of mixed economic data from the UK.
- Data from GfK showed that consumer confidence numbers fell to -31 in October.
- Retail sales rose in September as manufacturing and services PMIs disappointed.
The GBP/USD price is down slightly today as traders react to mixed consumer confidence, retail sales, and PMI data from the UK. It is trading at 1.3073, which is slightly below this week’s high of 1.3168.
UK consumer confidence fell
Consumer confidence is one of the closely-watched economic numbers because of its impact on the market. Highly confidence consumers tend to buy more, which boosts retail sales, inflation, and the overall economy.
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Earlier today, data by GfK showed that consumer confidence in the UK dropped from -25 in September to -31 in October. That was the lowest level since the pandemic started. It was also lower than the median estimate by analysts polled by Reuters.
Interestingly, the data did not capture the recent events when the country started restrictions on movement. This is because it was collected between Oct. 1 and Oct. 14. Therefore, there is a possibility that the confidence would be different if the data captured this information. In a statement, Joe Staton, the director at GfK said:
“There’s a worrying threat of a double-dip in consumer confidence as concerns for our personal financial situation and even deeper fears over the state of the UK economy drag the index down.”
UK manufacturing and services activity ease
The GBP/USD also reacted to the mixed manufacturing and PMI numbers. According to Markit, the manufacturing PMI declined from 54.1 in September to 53.3 in October. The median estimate by economists was for the PMI to fall to 54.3. Similarly, the services and composite PMI fell from 56.1 and 55.7 to 52.3 and 52.9, respectively.
Still, these numbers show that the manufacturing and services PMIs are still expanding. According to Markit, companies mentioned that demand was rising leading to a sharp and accelerated cost burden. In a statement, Duncan Brock, of CIPS said:
“Fears over inherent weaknesses in the UK economy materialised this month with a sudden fall in the overall index showing a sharp drop in new orders and a continuing erosion of employment opportunities.”
UK retail sales rise
On a positive side, the GBP/USD reacted to strong retail sales numbers. According to the Office of National Statistics (ONS), the headline retail sales in the UK rose by 1.5% in September, leading to an annualised gain of 4.7%. The core retail sales, which exclude the volatile food and energy products, rose by an annualised rate of 6.4%. The increase was better than analysts’ estimates.
According to the bureau, volume of sales was spread across the various segments. Food and non-store retailing remained at higher levels than in February while non-food stores recovered. Fuel was the only lagging sector.
These numbers are in line with the recent performance by most retail companies like Tesco, Sainsbury, and Ocado. All these firms recorded strong sales in the second and third quarters.
GBP/USD technical outlook
The daily chart shows that the GBP/USD price has struggled moving above the first resistance level of the Andrews pitchfork indicator. The price is also being supported by the 25-day and 50-day exponential moving averages and has just moved above the 78.6% Fibonacci retracement level. Also, the ascending channel resembles a bearish flag pattern. Therefore, at this stage, the outlook for the GBP/USD is bearish so long as it remains below the first pitchfork resistance.