The GBP/USD is slightly bearish today after a series of mixed economic data from the UK.
GfK data showed that consumer confidence figures fell to -31 in October.
Retail sales rose in September as the PMIs disappointed manufacturing and services sectors.
The GBP/USD price is down slightly today as traders respond to mixed consumer confidence, retail sales and UK PMI data. It is trading at 1.3073, slightly below the weekly high of 1.3168.
GBP/USD falls after mixed data
British consumer confidence has fallen
Because of its impact on the market, consumer confidence is one of the economic figures that is closely monitored. High consumer confidence tends to buy more, which boosts retail sales, inflation and the overall economy.
Earlier today, GfK data showed that consumer confidence in the UK fell from -25 in September to -31 in October. This was the lowest level since the pandemic began. It was also lower than the median of the analysts surveyed by Reuters.
Interestingly, the data did not cover recent events when the country began restricting freedom of movement. This is because they were collected between October 1 and October 14. Therefore, there is a possibility that confidence would be different if the data were to capture this information. In a statement, Joe Staton, the director of GfK, said
“There is a worrying risk of a double decline in consumer confidence as concerns about our personal financial situation and even deeper concerns about the state of the UK economy drag the index down.
Decline in UK manufacturing and services activity
The GBP/USD also responded to the mixed production and PMI figures. According to Markit, the manufacturing PMI fell from 54.1 in September to 53.3 in October. The economists’ medium estimate was that the PMI would fall to 54.3. Similarly, the service sector and mixed PMI fell from 56.1 and 55.7 to 52.3 and 52.9, respectively.
Nevertheless, these figures show that the PMIs for the manufacturing and service sectors are still rising. According to Markit, companies mentioned that demand is increasing, which is leading to a strong and accelerating cost burden. In a statement Duncan Brock of CIPS said
“Fears about inherent weaknesses in the UK economy have been confirmed this month with a sudden fall in the overall index, which shows a sharp drop in new orders and a continuing erosion of employment opportunities.
UK retail sales up
On the positive side, the GBP/USD reacted to strong retail sales. According to the Office of National Statistics (ONS), key retail sales in the UK rose 1.5% in September, resulting in an annualized increase of 4.7%. Core retail sales, which exclude volatile food and energy products, grew at an annualized rate of 6.4%. The increase was better than analysts’ estimates.
According to the office, the sales volume was distributed among the various segments. Food and non-food retailing remained at a higher level than in February, while non-food retailing recovered. Fuel was the only sector lagging behind.
These figures are consistent with the recent results of most retailers such as Tesco, Sainsbury and Ocado. All these companies reported strong sales in the second and third quarters.
Technical outlook GBP/USD
Technical Table GBP/USD
The daily chart shows that the GBP/USD price has been struggling to move above the first resistance level on the Andrews Pitchfork indicator. The price is also supported by the 25-day and 50-day exponential moving averages and has just passed the 78.6% Fibonacci retracement level. The rising channel also resembles a bearish flag pattern. As such, the outlook for the GBP/USD is bearish at this time as long as it remains below the first pitchfork resistance.