Pound Down Amid Weak U.K. Services PMI, Retail Sales
The pound slipped against its major counterparts in the European
session on Friday, as a drop in U.K. service sector activity for
April and retail sales for March clouded growth outlook.
Survey results from S&P Global and Chartered Institute of
Procurement & Supply showed that the U.K. private sector
activity expanded at a slower pace in April as inflationary
pressures and the war in Ukraine weighed on demand.
The flash composite output index fell to a 3-month low of 57.6
in April from 60.9 in March. Economists had expected a score of
The services purchasing managers' index dropped to a 3-month low
in April, coming in at 58.3 versus 62.6 in March and 60
UK retail sales declined more than expected in March and the
falling trend is likely to continue as consumer confidence fell to
near record low in April amid rising inflation and interest
Retail sales dropped 1.4 percent on a monthly basis, largely due
to the 7.9 percent fall in non-store retailing. Sales were forecast
to fall 0.3 percent after a revised 0.5 percent decrease posted in
Excluding automotive fuel, retail sales decreased 1.1 percent,
following a 0.9 percent fall in February. Economists had forecast a
moderate drop of 0.4 percent.
On a yearly basis, growth in retail sales volume eased sharply
to 0.9 percent in March from 7.2 percent in February. Sales were
expected to climb 2.8 percent.
Retail sales excluding auto fuel, slid 0.6 percent, after rising
4.7 percent a month ago. Economists had forecast an annual growth
of 0.7 percent.
Survey results from the market research group GfK showed that UK
consumer confidence dropped to a near historic low in April as
rising inflation and interest rates dampened household
The consumer sentiment index declined to -38 in April from -31
The pound was also weighed by hawkish comments from Federal
Reserve Chair Jerome Powell signaling aggressive policy tightening
in the coming months.
The pound touched 1.2862 against the greenback, a level unseen
since November 2020. The pound is seen finding support around the
The pound was down against the franc and the yen, at 3-day lows
of 1.2291 and 165.18, respectively. The pound is poised to
challenge support around 1.19 against the franc and 155.00 against
The pound fell to more than a 2-week low of 0.8398 against the
euro, from a high of 0.8311 seen at 5 pm ET. The pound is likely to
challenge support around the 0.86 region.
Looking ahead, Canada retail sales for February, manufacturing
sales, industrial product and raw materials price indexes, all for
March, are set to be released in the New York session.
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