- Pound (GBP) is rising for a second day
- UK retail sales and consumer confidence fall
- Euro (EUR) is falling despite the services PMI beating forecasts
- The composite PMI points to 0.3% GDP growth in Q4
The Pound-Euro (GBP/EUR) exchange rate is rising for a second straight day. The pair rose 0.19% in the previous session, settling on Thursday at €1.1340. It traded between €1.1310 and €1.1389. At 15:00 UTC, GBP/EUR trades 0.4% at €1.1385. The pair rose 0.43% across the week after four weeks of losses.
The pound rose on Friday as the broader market improved, despite disappointing UK data. Figures from the Office for National Statistics showed that UK retail sales tumbled in October and consumer confidence also fell, adding to signs of slowing consumer spending ahead of next week’s budget.
Retail sales plunged 1.1% month on month, well below 0.7% in September and significantly below the 0% forecast. The fall in retail sales comes as GFK consumer confidence nudged lower in November.
Separately, business activity data also pointed to a slowdown, as the composite PMI for services and manufacturing dropped to 50.5 in November, down from 52.2 in October, and barely above the 50 level that separates expansion from contraction. The data shows that business growth almost stalled this month as companies put everything on hold while they wait to see what next week’s government budget will bring.
The euro fell against the pound after mixed business activity data. On the one hand, the services PMI unexpectedly rose to 53.1 in November, up from 53 in October and ahead of the 53 that was expected. However, the manufacturing PMI slipped back into contraction territory, dropping to 49.7 in November, down from 50 in the previous month and defying expectations of an increase to 50.2.
As a result, the composite PMI, a good gauge of business activity, was a touch weaker than expected at 52.4, down from 52.5 in the previous month.
Output has increased over the past 11 months, with the PMI over the fourth quarter being consistent with GDP growth of 0.3%.