The pound was broadly weaker yesterday, despite gaining versus the euro. Yesterday's CBI survey data suggested that UK retail sales are falling sharply. While the data does not typically move the pound, the CBI survey showed that retail sales are falling at the fastest pace since March 2009 (the height of the financial crisis). Orders placed to suppliers are also falling at a fast pace. While UK economic data has been relatively good despite Brexit, this could be the first sign that the future is more uncertain.
GBP/USD is currently just below 1.310. EUR/GBP is up slightly this morning after falling sharply yesterday, and is currently trading below 0.8980. The pound is down against both the Australian dollar and the Canadian dollar. GBP/AUD is below 1.7130, while GBP/CAD is just below 1.6860.
This is a fairly light week for the pound. Wednesday's Q3 year-over-year GDP growth figures were above expectations (1.5% vs. 1.4% expected). The pound was up sharply on the news. Last week, unemployment figures and inflation met expectations while retail sales were quite weak.
After strengthening in the second week of October, we are now neutral on the British pound. The pound rebounded after senior Conservative Party leaders publicly backed Theresa May, suggesting that rumors of May's resignation were unfounded. The pound has been particularly strong against the US dollar and the euro in recent times. After looking overbought on a range of technical indicators, the pound is now back to trading within normal conditions.