Investing.com - The pound was broadly lower on Friday as markets digested survey data from Thursday showing the sharpest decline in retail sales since the height of the financial crisis.
Following the release of UK GDP data on Wednesday, cable jumped more than 1%. However, although the growth figure was better forecast and boosted sterling on Wednesday, at 0.4% it was not strong enough for the pound to hold onto its gains.
At 11:10 GMT on Friday, sterling fell to its week-low, dropping below the 1.31 handle. GBP/USD was down 0.53% to 1.3091.
The Confederation of British Industry (CBI) released its monthly Distributive Trades Survey on Thursday, showing steeper inflation was beginning to bite the British consumer.
Retails sales balance figures showed a decrease of 36 in the year to October, a significant drop from September’s increase of 42. The decline was the worst since 2009.
Rain Newton-Smith, CBI Chief Economist commented on the survey results: “While retail sales can be volatile from month to month, the steep drop in sales in October echoes other recent data pointing to a marked softening in consumer demand.”
The Bank of England's Monetary Policy Committee will meet on Thursday 2 November to vote on interest rates. Increasing rates is dependent on committee members viewing economic data as favourable for the outlook of the UK. The CBI retail sales figures may have caused some hike-related jitters among traders as it serves as food for thought for some committee members.
The US dollar index, a measure of the greenback’s strength against a trade-weighted basket of six currency majors was up 0.33% to 94.86 ahead of US GDP data for the third quarter.
The dollar rallied to 14 week highs as tax reform looked increasingly more likely, with the bill clearing the House vote on Thursday.
EUR/USD was down 0.33% to 1.1614. The euro made losses after the European Central Bank announced it would extend its Asset Purchase Programme by at least another nine months. It announced it would taper to 30 billion euros. The bank rhetoric was largely seen as dovish, causing the euro to tumble.
Sterling gave back most of Thursday’s gains and fell 0.21% against the single currency on Friday. EUR/GBP was 0.8872.
The pound was also down against safe haven and commodity currencies. GBP/JPY dropped 0.41% to 149.40, with GBP/CHF down just 0.11% to 1.3112.
GBP/AUD dipped 0.31% to 1.7127 while GBP/NZD lost 0.57% to 1.9127.
GBP/CAD trimmed 0.21% to 1.6867.
Investors will be watching the economic growth figures for the US released Friday.
Any comments from MPC members will also be watched to gauge a hawkish or dovish tone ahead of next Thursday's vote.