Pound Slips As Weak U.K. Retail Sales Reduce BoE Rate Hike Hopes
October 22 2021 - 3:27AM
RTTF2
The pound declined against its major counterparts in the
European session on Friday, as the nation's retail sales fell
unexpectedly for the fifth consecutive month in September.
Data from the Office for National Statistics showed that the
retail sales volume including auto fuel decreased 0.2 percent
month-on-month in September, after easing by revised 0.6 percent in
August. Sales were forecast to grow 0.5 percent.
Due to falls in household goods stores sales, non-food stores
reported a decline of 1.4 percent in sales volumes. Meanwhile, food
store sales volumes rose 0.6 percent in September.
Automotive fuel sales advanced 2.9 percent as demand towards the
end of September increased sales.
On a yearly basis, retail sales volume declined 1.3 percent,
bigger than August's 0.2 percent fall and the economists' forecast
of -0.4 percent.
Month-on-month, retail sales volume excluding auto fuel, was
down 0.6 percent versus a 0.7 percent fall in August. The decline
was in contrast to the forecast of 0.2 percent growth.
Excluding auto fuel, the annual decline in retail sales volume
deepened to 2.6 percent from 1.1 percent. The expected fall was 1.7
percent.
The drop in retail sales prompted traders to trim their
expectations for a rate hike at the meeting in November.
BoE chief economist Huw Pill said that the November meeting is
"finely balanced," adding that there is a possibility of inflation
touching 5 percent or above in the coming months.
The pound weakened to a 1-week low of 1.2626 against the franc
from Thursday's close of 1.2648. The pound is seen finding support
around the 1.25 mark.
The pound depreciated to a 2-day low of 1.3771 against the
greenback before rebounding to 1.3814 around 5 am ET. The pair had
ended yesterday's deals at 1.3792.
The pound reached as low as 156.84 against the yen, falling from
Thursday's close of 157.17. Further fall in the pound may face
support around the 149.00 area.
The pound hit a 2-day low of 0.8454 against the euro around 4 am
ET, but it has since recovered to 0.8423.
Flash survey results from IHS Markit showed that Eurozone
private sector growth eased sharply to a six-month low in October
amid rising supply bottlenecks and COVID-19 concerns.
The composite output index dropped to 54.3 in October from 56.2
in September. The reading was expected to fall to 55.2.
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