In October, retail sales in the UK dropped by 0.7%, more than doubling the forecasted decline of 0.3%.
The country’s economic growth crawled forward in the third quarter, increasing by a mere 0.1%.
Meanwhile, in the US, initial jobless claims last week dropped surprisingly from 219,000 to 213,000, defying expectations.
The analysis of GBP/USD indicates weaker consumer spending in the UK, which has nudged the pound to its lowest point in six months. In contrast, the US job scene remains sturdy, dampening hopes for immediate Fed rate cuts.
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Friday’s figures highlighted the slump in UK retail sales, a 0.7% drop that starkly contrasts with predictions. This decrease is a clear sign of frail consumer spending, aligning with other reports that hint at a slowing UK economy. The GDP data echoed this sentiment, revealing just a 0.1% growth in the third quarter.
Adding to the uncertainty, the UK’s PMI for services and manufacturing fell short of expectations. These negative numbers could keep the pressure on the pound throughout the trading day.
Should this trend persist, the Bank of England might revisit its timeline for reducing rates. Initially, it was believed that the new government budget would invigorate the economy. However, the data so far paints a different picture.
Conversely, the US economy is showing its resilience despite high interest rates, which keeps US policymakers on their toes. Last week’s data showed an unexpected drop in initial jobless claims from 219,000 to 213,000, whereas economists had anticipated 220,000.
The labor market’s strength has prompted the Federal Reserve to hold off on cutting rates. Additionally, Trump’s recent victory has reshaped prospects for economic expansion and inflation. His policy changes might spur growth and ignite inflation. Should inflation soar, the Fed could maintain high interest rates, which would be favorable for the dollar.
### Key Events for GBP/USD Today
– US flash manufacturing PMI
– US flash services PMI
### GBP/USD Technical Price Analysis: Bears Push for a Dip to 1.2500 Support
On the technical front, GBP/USD has slipped below the 1.2600 support, hitting a fresh low around the 1.2500 psychological mark. This new low signals a continuation of the downward trend after the 30-SMA resistance was retested.
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Yet, the RSI shows a slight bullish divergence. While the price reached a lower low, the RSI saw a higher one, suggesting waning bearish momentum that could prompt a reversal. However, if it remains beneath the 30-SMA, bears might eventually break through the 1.2500 support barrier.
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