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Forex News: Pound Down Amid Weak U.K. Services PMI, Retail

Pound Down Amid Weak U.K. Services PMI, Retail Sales

04/22/2022 - 07:57:00 (RTTNews)

(RTTNews) - The pound slipped against its major counterparts in the European session on Friday, as a drop in U.K. service sector activity for April and retail sales for March clouded growth outlook.

Survey results from S&P Global and Chartered Institute of Procurement & Supply showed that the U.K. private sector activity expanded at a slower pace in April as inflationary pressures and the war in Ukraine weighed on demand.

The flash composite output index fell to a 3-month low of 57.6 in April from 60.9 in March. Economists had expected a score of 59.

The services purchasing managers' index dropped to a 3-month low in April, coming in at 58.3 versus 62.6 in March and 60 expected.

UK retail sales declined more than expected in March and the falling trend is likely to continue as consumer confidence fell to near record low in April amid rising inflation and interest rates.

Retail sales dropped 1.4 percent on a monthly basis, largely due to the 7.9 percent fall in non-store retailing. Sales were forecast to fall 0.3 percent after a revised 0.5 percent decrease posted in February.

Excluding automotive fuel, retail sales decreased 1.1 percent, following a 0.9 percent fall in February. Economists had forecast a moderate drop of 0.4 percent.

On a yearly basis, growth in retail sales volume eased sharply to 0.9 percent in March from 7.2 percent in February. Sales were expected to climb 2.8 percent.

Retail sales excluding auto fuel, slid 0.6 percent, after rising 4.7 percent a month ago. Economists had forecast an annual growth of 0.7 percent.

Survey results from the market research group GfK showed that UK consumer confidence dropped to a near historic low in April as rising inflation and interest rates dampened household finances.

The consumer sentiment index declined to -38 in April from -31 in March.

The pound was also weighed by hawkish comments from Federal Reserve Chair Jerome Powell signaling aggressive policy tightening in the coming months.

The pound touched 1.2862 against the greenback, a level unseen since November 2020. The pound is seen finding support around the 1.25 level.

The pound was down against the franc and the yen, at 3-day lows of 1.2291 and 165.18, respectively. The pound is poised to challenge support around 1.19 against the franc and 155.00 against the yen.

The pound fell to more than a 2-week low of 0.8398 against the euro, from a high of 0.8311 seen at 5 pm ET. The pound is likely to challenge support around the 0.86 region.

Looking ahead, Canada retail sales for February, manufacturing sales, industrial product and raw materials price indexes, all for March, are set to be released in the New York session.

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