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GfK said consumers are waiting for the big ticket bargains
After a set of data that suggested that the UK economy was in a downward spiral, this morning there were signs that that message has not yet got through to shoppers. Retail sales in the UK increased by 0.5% in September – far ahead of a predicted decline – while the GfK Consumer Confidence Index improved to -17. That’s still firmly in the negative, but again better than expected.
GfK said that the improvement was led by ‘big ticket’ items, which households were waiting to buy on Black Friday (28 November); shoppers having got savvier about such things during the years of high inflation.
The effect of all this on sterling has been fairly muted so far, and the pound is around a third of a cent down on the pound, euro, Swiss franc and others compared to yesterday.
It has been a largely negative week for the pound, in step with a blizzard of information that started with unemployment (up) and earnings (moderating), then GDP (flat) and inflation (down). While the forecasters are not yet ready to predict an interest rate cut on 6 November, it is certainly less unlikely.
But it’s not all over yet, as we have the Purchasing Managers Index (PMI) about to land too. This measure of global business mood allows for comparisons across the world, and of late US businesses have been more bullish about the future than European, with the UK somewhere in the middle.
A warning has come from the CBI, however. Manufacturers in the Confederation of British Industry said they had the worst order books since the pandemic. We will see if that’s reflected in the PMI at 9.30am.
Black Friday will be two days after the UK’s autumn Budget, about which expectation has already been building for weeks, and we are still over a month away. The pound to euro rate has been steady for months now but could the dam be about to burst one way or another? Make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract; call your Business Account manager on 020 3918 7255 to get started.
In a political upheaval, the Labour Party lost its seat in Caerphilly, Wales, for the first time ever in a by-election last night. Even more shocking, Labour trailed in third with just one in ten votes. The winner was Welsh nationalist party Plaid Cymru, with Reform UK second.
GBP: Pound falls again, but not far
Sterling has come through this period of data relatively unscathed against the euro – possibly only saved by the euro’s own global decline. PMI will be the last of the big data items to come through this month, but then attention will switch to the Bank’s interest rate decision on 6 November.
GBP/USD past year
EUR: A better day for the euro
There was a mix of green and red on the boards for the single currency yesterday, with gains on the pound and US dollar. But there is no escaping a negative picture overall over the past week and month. Business optimism appears to be the bogeyman and we will hear more on that shortly with PMI, with next week livened up with GDP data.
EUR/USD past year
USD: Dollar treading water ahead of Fed decision
The White House’s East Wing may be tumbling, but the US dollar is proving a tougher nut despite the dovish mood music ahead of the interest rate decision on Wednesday next week. A mixed picture has included gains on the pound of 0.8% and half that on the euro, but just as large losses elsewhere.
USD/GBP past year
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