GBP/USD Struggles as Weak Retail Sales Undermine Sterling

Summary:

GBP/USD slips toward 1.3380 as weak UK retail sales and a recovering US Dollar offset stronger business activity and expectations of a November BoE rate hike. US PMI data is the next key focus.

Sell GBPUSD

EXP

PENDING

1.33600

ENTRY

1.31900

TGT

1.34500

1.33711 -0.00276 -0.21%

Point

PENDING

1.31900

TGT

CLOSING

1.33600

ENTRY

1.34500

The British Pound weakened toward 1.3380 against the US Dollar on Friday, struggling to gain traction despite stronger-than-expected UK business activity as disappointing retail sales and a rebound in the Greenback offset optimism over the economic outlook. The contrast highlights Sterling’s difficulty turning positive growth signals and expectations of a November Bank of England (BoE) rate hike into sustained gains.

The UK’s preliminary S&P Global Composite PMI rose to 53.1 in October from 52.0 in September, beating forecasts of 51.8 as manufacturing and services activity strengthened. S&P Global’s Chief Business Economist Chris Williamson said the economy was expanding at its fastest pace since February, with firms also increasing hiring for the first time since the 2024 Autumn Budget affected employment.

However, consumer spending offered a less encouraging picture. UK retail sales fell 0.4% month-on-month in September, exceeding expectations for a 0.1% decline. This divergence between stronger business activity and weaker retail demand suggests that the recovery remains uneven, limiting the positive impact of the PMI figures on Sterling.

Meanwhile, expectations for tighter monetary policy continue to build. Societe Generale strategists consider a BoE rate hike in November almost certain, pointing to stronger-than-expected consumer and producer price inflation alongside firmer wage growth. These pressures could raise concerns about persistent inflation and prompt a more hawkish response from policymakers.

For GBP/USD, the immediate challenge is the US Dollar’s recovery after four consecutive days of losses. Investors are awaiting the preliminary US S&P Global PMI report for October, due at 13:45 GMT. Stronger-than-expected US activity could extend the Dollar’s rebound and keep Sterling under pressure, while weaker data may offer the Pound some relief.

Technical Analysis

GBP/USD is trading near 1.3374 after stalling at the 1.3404-1.3417 supply zone, with two failed pushes (about 1.3418 and 1.3409) forming a double top. The pair had rallied about 280 pips in roughly eight sessions from the mid-October spike low near 1.3140, which sits within a few pips of the 2026 low of 1.3141 set on June 24, so the 1.3140 area has now held twice. The supply zone is also where the pair broke down in mid-September, so the advance looks like a retest of broken support from below. Sellers are reasserting themselves, but the strength of the rally means bears still need confirmation.

The immediate focus is on the 1.3356 neckline, the low of the pullback between the two peaks. A decisive H4 close below it could strengthen bearish momentum, with the double-top measured move (about 60 pips) pointing to 1.3295. Beyond that lies the 1.3274-1.3283 zone, the former range ceiling that should now act as support. A close below 1.3274 would open the door toward the 1.3190-1.3178 zone, the floor of the September-October range. If sellers maintain control, the pair could revisit the 1.3140 double-bottom area.

However, the pair remains vulnerable to renewed buying if it holds above the neckline. A rebound could retest the 1.3404-1.3417 zone, and a sustained break above 1.3418 would invalidate the double top and open the door toward 1.3460, where the mid-September breakdown began. The critical upside level remains 1.3425, and a close above it would negate the bearish scenario.

Overall, GBP/USD has a cautiously bearish short-term outlook, with a sustained break below 1.3356 needed to confirm further downside toward 1.3295 and then 1.3190. Until that break occurs, the pair could keep probing the supply zone, and the strength of the rebound argues for patience.

TRADE RECOMMENDATION

SELL GBP/USD

ENTRY PRICE: 1.3360

STOP LOSS: 1.3450

TAKE PROFIT: 1.3190

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Warren Takunda

Analysts

Warren Takunda, a seasoned finance leader specializing in the Middle East, is a trusted senior analyst with a proven track record. As head of the finance team, he excels in financial planning, analysis, and reporting. Warren's expertise in financial modeling and investment analysis delivers valuable insights to clients.

Rank

Articless

3156

Win Rate

63.79%

P/L Ratio

0.73

Focus on

XAUUSD, EURUSD, GBPUSD

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GBP/USD Struggles as Weak Retail Sales Undermine Sterling

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