GBP/USD, GBP/EUR up as UK retail sales improve but remain depressed long-term
October retail sales were stronger than forecast, rising 0.6% against estimates of 0.3%. However, the longer term still points to a softening as the UK has yet to return to levels of spending seen pre-Covid.
(Video Transcript)
There has been UK retail sales data out this morning on this Friday showing a slightly better number than had been expected.
We have had a poor comparator in terms of the September figure when the Queen's funeral saw a number of shops shut. But for the month of October, the headline rates month-on-month (MoM) came in at 0.6%. We've been looking for a 0.3% figure.
But in the longer term, the Office of National Statistics says that there is still a drop on the overall picture and we're still not yet back up to pre-pandemic levels. That being said, the markets seem to be focusing in on what's happening today and the numbers as they compare to expectations.
GBP/USD
Let's take a look at what's happening with sterling as we look at GBP/USD. It's up on the session today and indeed if we close at these levels, it'll be very near the highest close that we've seen since the 19th of August.
You remember the Kwasi Kwarteng lows that we had when that budget statement came through and the five weeks we've had since then. Yesterday, Jeremy Hunt got up to speak. We saw a negative day yesterday for sterling against the US dollar, but things have recovered in today's trade.
GBP/EUR
And it's the same price action as well for sterling today against the euro.
Now, we have been flatlining on this market since a couple of weeks ago, actually. And the week will close out with gains this week. But broadly speaking, it's very difficult to see us exiting this very tight sort of border that we have got.
GfK consumer confidence
Just one other bit of news out this morning in the British economy, GfK consumer confidence figure out this morning coming in slightly better than had been expected.
A negative -44 in November, up from a -49 that we saw a month or two ago. So that is a slight improvement.
But nonetheless, still with negativity and a lot of concerns about households failing to be able to get through the winter without having to lean on loans. That's the big concern as we look out for the UK economy over the next two or three months.
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