US business strength bolsters Dollar, leaving British Pound struggling near 1.3400

• Renewed Dollar demand takes GBP/USD 0.16% lower to 1.3378.
• US Manufacturing PMI reaches 56 even as consumer confidence weakens.
• Ahead of next week's Fed decision, UK Retail Sales growth slows markedly.

Expanding US business activity contrasts with deteriorating consumer sentiment on Friday, as households complain about high prices. Against that backdrop, the Pound Sterling falls roughly 0.16% against the US Dollar, with GBP/USD trading at 1.3366.

GBP/USD falls as firm US activity and weak UK Retail Sales undermine sentiment

With tensions still elevated in the Middle East, US President Trump said that “we could end the war with Iran very quickly”, before adding that “do we want to finish it or let it within is the question.” He also offered reassurance that the US controls the Strait of Hormuz.

At the same time, attacks on Saudi Arabian interests by the Houthis persisted. Iran’s IRGC also kept striking ships passing through the Strait via an “illegal route.”

US figures pointed to continued expansion in business activity, albeit at a slower rate. October's S&P Global Manufacturing PMI registered 56, up from September's 55.9. By contrast, the Services PMI eased to 57.9 from 58.8, in line with economists' expectations. Higher prices and expectations of higher interest rates were cited as reasons for the University of Michigan Consumer Sentiment Index's decline to a five-month low in October. The index slipped to 48, compared with 48.1 in the preceding month.

One-year inflation expectations, meanwhile, held steady at 4.7%, with the five-year measure standing at 3.5%.

As the Greenback recouped part of its earlier decline, GBP/USD gave back some of its gains. Measuring the US currency against a basket of six currencies, the US Dollar Index (DXY) stands at 101.79, up 0.17%.

Attention next week turns to the Federal Reserve's monetary policy decision and the release of the Core Personal Consumption Expenditures (PCE) Price Index.

UK releases offered a mixed picture. The S&P Global Composite PMI climbed from September's 52.0 to 53.1, but Retail Sales growth slowed from 2.7% to 0.8% over the same period, falling short of forecasts.

Speaking on Friday, British Prime Minister Andy Burnham said businesses would be given “breathing space to grow.” by next week’s first annual budget statement.

GBP/USD Price Forecast: Near-term pressure persists 

Trading at 1.3367 on the daily chart, GBP/USD retains a bearish near-term outlook. Its advance remains constrained by a cluster of simple moving averages near 1.3404 and descending trend-line resistance at 1.3402, originating from 1.3653. Former rising trend supports at 1.3628 and 1.3811 sit above the pair and now serve as barriers. Meanwhile, a Relative Strength Index (14) reading of 54.5 suggests only limited corrective upward momentum, rather than a lasting turn towards a bullish trend.

The descending trend line near 1.3402 provides the first upside resistance, just ahead of the cluster of three simple moving averages at 1.3404. To relieve immediate downward pressure, the pair would need a daily close above that area. Beyond it, the former rising trend supports at 1.3628 and 1.3811 present successively stronger resistance zones. Should the decline continue, buyers could try to arrest it near 1.3266, where the broken resistance trend line marks the principal nearby structural support.

(The technical analysis of this story was written with the help of an AI tool. Know more.)