Pound sterling  expected to see a steep sell-off as flash PMI and UK retail sales fell.

The United Kingdom’s (UK) flash S&P Global/CIPS Purchasing Managers’ Index (PMI) data for November unexpectedly fell, and the Retail Sales data for October contracted more quickly than anticipated, which causes the Pound to weaken against most of its peers, with the exception of the Euro (EUR).

The US flash S&P Global PMI data eagerly awaited by investors.

For the first time in over a year, the Composite PMI, which takes into consideration both manufacturing and service business activity, showed an unexpected decline, according to the agency. Market analysts take into a contraction with a value below the 50.0 threshold. It was anticipated that the index would grow steadily to 51.8 after contracting to 49.9. Compared to the estimates and the previous release of 49.9, the Manufacturing PMI fell more quickly to 48.6. The output of the service sector was at its lowest level since February, but it was still able to maintain the 50.0 threshold.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, stated, “The November PMI is indicative of the economy slipping into a modest decline, with GDP dropping at a 0.1% quarterly rate, but the loss of confidence hints at worse to come – including further job losses – unless sentiment revives.”

A crucial indicator of consumer spending, retail sales, fell 0.7% from the prior month. In Sales in September rose by a slight 0.1%, which was a downward revision from the 0.3% that had been previously reported. Retail sales increased by 2.4% year over year, which was less than the 3.4% forecast and the 3.2% (downwardly revised from 3.9%) previous release.

BoE dovish bets for December could be strengthened by weak UK retail sales and PMI data.

The Bank of England (BoE) expected to raise expectations of interest rate cuts at its December meeting due to weakness in retail sales data and overall private business activity. For the time being, however, traders anticipate that the BoE will maintain interest rates at 4.75% at both the December and February meetings. This is due to the fact that UK inflation data in October was more intense than anticipated, with services inflation—a key inflation metric that the BoE uses to determine interest rates—rising to 5 percent.

Daily Market update: Pound sterling faces pressure against the US dollar ahead of US flash PMI.

In Friday’s London session, the value of the pound sterling plummets to almost 1.2500 versus the US dollar (USD), the lowest level in over six months. The weak UK Retail Sales data causes the GBP/USD pair to continue its decline. But as the US dollar (USD) gained strength as a result of lower-than-expected US initial jobless claims for the week ending November 15, pressure was already mounting on the cable.

Unexpectedly, the number of people filing for unemployment benefits for the first time was 213K, which was less than the 220K predicted. Reduced unemployment claims allay worries about the job market. But the survey also revealed that people were taking longer than normal to look for new employment.

Expectations that the Federal Reserve (Fed) will reduce interest rates during the current policy-easing cycle have maintained the US dollar’s outlook. Investors’ expectations that President-elect Donald Trump’s economic agenda will increase inflationary pressures and economic growth have bolstered market expectations for the Fed to take a more gradual policy-easing approach. This scenario will require the Fed to maintain its prudence on interest rates.

Financial Times (FT) on Thursday, Richmond Fed Bank President Thomas Barkin stated that because producers are passing on costs to consumers more than they used to, the economy is more susceptible to inflationary shocks.

In an interview with the Financial Times (FT) on Thursday, Richmond Fed Bank President Thomas Barkin stated that because producers are passing on costs to consumers more than they used to, the economy is more susceptible to inflationary shocks, according to Reuters. “We’re a little more susceptible to price shocks.” compared to five years ago, on the inflation side,” Barkin stated.

Investors will be watching the preliminary S&P Global PMI data for November, which scheduled to be release at 14:45 GMT on Friday during the US session. In order to gain new insights into the state of the economy, the effect of recent rate cuts by the Fed, and the impact of Donald Trump’s victory on business sentiment, investors will closely monitor the PMI data.