Pound Slides After Weak U.K. Retail Sales Data

(RTTNews) - The British pound weakened against other major currencies in the European session on Friday, after U.K. retail sales declined for the first time in five months in October as consumers delayed their spending in the lead up to Black Friday.

Data from the Office for National Statistics showed that the U.K. retail sales fell 1.1 percent on a monthly basis in October, in contrast to the 0.7 percent increase in September. This was the first fall in five months and worse than economists' forecast of 0.1 percent drop.

The British consumer confidence deteriorated in November ahead of the upcoming autumn budget, a private survey revealed. The consumer sentiment index dropped two points to -19 in November, a survey jointly published by GfK and the Nuremberg Institute for Market Decisions showed Friday.

Data from S&P Global showed that the U.K. composite PMI fell sharply to 50.5 from 52.2 in October. Despite a favorable surprise from Manufacturing, which resumes growing at 50.2, the Services sector's weakness significantly hinders overall activity.

As inflation declines and the labor market exhibits symptoms of exhaustion, these indicators further bolster expectations of further policy easing from the Bank of England (BoE).

The next significant drive of the British currency is the Autumn Budget on November 26, when Chancellor of the Exchequer Rachel Reeves is anticipated to increase some taxes to close a £22 billion budget deficit.

In the European trading today, the pound fell to a 2-day low of 204.53 against the yen, from an early high of 206.06. The pound may test support near the 198.00 region.

Against the euro, the U.S. dollar and the Swiss franc, the pound slid to 0.8832, 1.3056 and 1.0541 from early highs of 0.8811, 1.3103 and 1.0553, respectively. If the pound extends its downtrend, it is likely to find support around 0.89 against the euro, 1.29 against the greenback and 1.03 against the franc.

Looking ahead, Canada retail sales data for September, new housing price index for October, U.S. PMI data for October, U.S. University of Michigan's consumer sentiment data for November and U.S. Baker Hughes oil rig count data are set to be released in the New York session.