The volume of retail sales in the UK dropped by 0.8%. A drop of 0.1% was expected. September saw a rise of 0.6%.
GBP/USD is at lower ground, touching a new low of 1.5825 before bouncing a big higher, but it is still under the previous trough of 1.5840 seen yesterday. The gradual drop continues. Update: GBP/USD is now making a sharp reversal, rising back to 1.5850 – a roller coaster.
This shows once again, that the wonderful Q3 that the British economy had, didn’t see a follow through in Q4, at least not in October.
Yesterday, the UK reported a rise in jobless claims in October, and a drop in the unemployment rate during September.
The Bank of England is not blind to these developments: Mervyn King states that the economy could shrink in Q4 and partially blamed the high value of sterling. How far can the pound drop?
For more, see the British pound forecast.