Pound Declines Amid Weak U.K. Retail Sales Data, Political Crisis
October 21 2022 - 1:00AM
RTTF2
The pound dropped against its major counterparts in the European
session on Friday, as the nation's retail sales fell more than
expected in September and the resignation of Prime Minister Liz
Truss triggered political instability.
Data from the Office for National Statistics showed that retail
sales dropped 1.4 percent month-on-month, following a revised 1.7
percent decline in August. Economists had forecast sales to drop at
a slower pace of 0.5 percent.
Excluding auto fuel, retail sales fell 1.5 percent after easing
1.7 percent in the previous month. Sales were forecast to ease 0.3
percent.
On a yearly basis, the decline in retail sales worsened to 6.9
percent in September from 5.6 percent in August. Economists had
expected sales to fall 5.0 percent.
Excluding auto fuel, retail sales decreased 6.2 percent versus a
5.3 percent decline in the previous month. Sales were forecast to
drop only 4.1 percent.
Truss resigned overnight following a rebellion in her political
party, as an economic program fuelled concerns about financial
stability.
The ruling Conservative Party is expected to select a successor
by the end of next week.
The GBP/USD pair touched an 8-day low of 1.1147. The pound may
locate support around the 1.10 level.
The GBP/JPY pair fell to 168.04, from a high of 168.75 seen at
3:25 am ET. If the pound falls further, it is likely to test
support around the 160.00 region.
The pound reversed from its early highs of 1.1277 against the
franc and 0.8702 against the euro, dropping to a 3-day low of
1.1220 and an 8-day low of 0.8766, respectively. Next key support
for the currency is possibly seen around 1.08 against the franc and
0.89 against the euro.
Looking ahead, Canada retail sales for August, as well as new
housing price index and wholesale sales and U.S. monthly budget
statement, all for September, will be featured in the New York
session.
At 10:00 am ET, Eurozone flash consumer sentiment index for
October will be out.
Sterling vs Yen (FX:GBPJPY)
Forex Chart
From Aug 2024 to Sep 2024
Sterling vs Yen (FX:GBPJPY)
Forex Chart
From Sep 2023 to Sep 2024