GBP/USD: UK Consumer Activity Cools in the Run-Up to the Festive Season

UK retail gross sales -0.9% in September (-0.3% anticipated)
UK Gfk shopper confidence -30 in October (-20 anticipated)
GBP/USD dropping momentum close to latest lows

UK customers are reining in spending within the run-up to the festive season and the most recent survey from Gfk suggests it’s not simply the climate that’s driving it.

Retail gross sales fell 0.9% in September, far exceeding expectations of a 0.3% decline as unseasonably heat climate weighed on gross sales of Autumn clothes. Whereas that’s not a brand new phenomenon, climate is usually referenced in these reviews, it additionally comes at a time when the price of residing pressures are being felt despite the fact that wages are actually outpacing inflation.

Whether or not it’s increased costs on the pump or grocery store, bigger power payments, or huge will increase in mortgages and rents, households are feeling the strain and that’s not simply being mirrored in gross sales however surveys too.

The Gfk shopper confidence slipped again to -30 once more and cost-of-living pressures had been cited as a purpose for that. Whereas there’s a view that decelerating inflation – which Governor Bailey indicated will fall sharply in October – might assist shopper spending, I’m much less satisfied after such an extended interval of falling actual wages and continued pressures from increased rates of interest.

A Double-Backside Forming?

The restoration earlier this month didn’t final lengthy, with the value working into resistance round 1.2350, simply shy of the 200/233-day easy transferring common band.

Supply – OANDA on Buying and selling View

is now going through an fascinating take a look at of assist as one other rebound round these ranges might probably arrange a double backside following a considerable decline over the previous couple of months.

The pair seems to be struggling to generate recent momentum close to the lows even because the stays supported by increased US yields and the pound was briefly hit by the softer spending knowledge. One other bounce might draw focus again to final weeks highs round 1.2337 which can characterize the neckline of that double backside.

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