Weak UK Retail Sales Data Drives GBP/USD Lower as Consumer Spending Declines

The Pound Sterling (GBP) retreated after the UK Office for National Statistics (ONS) reported weak Retail Sales data for September. UK households have postponed their demand for core goods as higher borrowing costs and stubborn inflation have squeezed their spending power. The GBP/USD pair has been exposed to more downside as declined consumer spending indicates that the overall demand will remain vulnerable, which would force UK firms to scale down their operating capacity further.

The consequences of a slowdown in the retail demand would be borne by producers and job-seekers as weak consumer spending could result in lower production by firms and henceforth soft demand for labor. For Bank of England (BoE) policymakers, poor retail demand cuts consumer inflation expectations significantly and cools the economy. This would allow the BoE to extend the rate pause to the November monetary policy meeting.

The reading continues to be the same for the GBP/USD as it is entering an accumulation phase while waiting for a clear direction. The short-term reading seems bearish going toward the next support at 1.2050.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
1.2450	1.2300	1.2200	1.2050	1.2000	1.1820