The pound remained range-bound against the greenback last Friday, following the release of weak UK retail sales data for October. The US housing permit data for October surpassed estimates. However, the lower-than-anticipated US inflation data released last week has raised expectations of an end to the Fed rate hike cycle. This keeps the US dollar weak against its rivals, including the pound. Overall, the GBP/USD pair traded between 1.2370 and 1.2465 in the final trading session of last week.
According to the Office for National Statistics (ONS), the UK’s retail sales inched down by 0.30% m-o-m in October following a decline of 1.10% in the previous month and disappointed the market, which was expecting a growth of 0.50%
The decline was led by a 2% drop in automotive fuel sales volumes. Sales volumes decreased by 0.70% in the three months to October, compared with the earlier three months.
Food store sales volumes inched down by 0.30% in October after remaining unchanged in the previous month. Specifically, specialist food stores (butchers, bakers, etc.) and alcohol and tobacco stores recorded a decline of 4.20% and 10.4%, respectively.
Non-food store sales volumes declined by 0.20% in October, following a 2.10% decrease in September. In particular, clothing stores posted a decrease of 0.90%. Also, household goods stores recorded a decline of 1.10%. Department stores inched down 0.10%.
Additionally, non-store retail sales volumes inched up 0.80% in October, following a decline of 2.40% in September.
Overall, the UK’s retail sales dipped 1.10% in the three months to October, compared with the earlier three months.
On a y-o-y basis, retail sales declined by 2.70% in October, reflecting the 19th consecutive month of decline.
According to the US Census Bureau, the country’s building permits increased by 1.10% to 1,487,000 units in October from 1,471,000 units in September and surpassed forecasts of 1,450,000 units.
However, the reported figure is 4.40% lower than the October 2022 figure of 1,555,000 units. Single-family authorizations in October were 968,000 units, up 0.50% from 963,000 units in September.
The Census Bureau also stated that housing starts were 1,372,000 units in October, up 1.90% from 1,346,000 units in September and greater than forecasts of 1,350,000 units.
However, the reported figure is 4.20% lower than 1,432,000 units in October 2022. Single-family housing starts were 970,000 units in October, up 0.20% from 968,000 units in September.
The weak UK retail sales data is expected to keep the GBP/USD pair slightly bearish in the days ahead.
The historical price chart indicates that the GBP/USD pair is gaining ground after consolidating at 1.2370. The next resistance is anticipated to be only near 1.2660. Additionally, the currency pair is trading above its 50-day moving average, while the stochastic indicator is in the bullish zone. Therefore, we anticipate the GBP/USD pair to remain in an uptrend in the short term.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
