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Pound Falls Amid War Worries, Downbeat Retail Sales Data

The British pound weakened against other major currencies in the European session on Friday, as European shares traded lower amid worries over rising bond yields and the escalating Israel-Hamas conflict.

Sentiment was also dented after official data showed U.K. retail sales logged a bigger-than-expected decline in September.

Retail sales dropped 0.9 percent on a monthly basis, in contrast to the 0.4 percent increase in August as the cost-of-living pressures damped spending and consumer sentiment.

Year-on-year, overall retail sales volume dropped at a slower pace of 1.0 percent after easing 1.3 percent in August.

Elsewhere, survey results from GfK showed that rising energy costs, high mortgage and rental rates, and geopolitical risks had dampened consumer sentiment in October.

The consumer confidence index unexpectedly fell to -30 from -21 in September. The score was forecast to improve to -20.

In the European trading today, the pound fell to nearly a 6-month low of 0.8740 against the euro and more than a 1-year low of 1.0782 against the Swiss franc, from early highs of 0.8705 and 1.0836, respectively. If the pound extends its downtrend, it is likely to find support around 0.88 against the euro and 1.06 against the franc.

Against the U.S. dollar and the yen, the pound edged down to 1.2093 and 181.27 from early highs of 1.2146 and 181.96, respectively. On the downside, 1.18 against the greenback and 177.00 against the yen.are seen as the next support levels for the pound.

Looking ahead, Canada retail sales data for August and U.S. Baker Hughes oil rig count data are slated for release in the New York session.

At 8:30 am ET, ECB board member Elizabeth McCaul is scheduled to deliver a speech at the conference “SSM Regulation, ten years since”, in Rome, Italy.

Half-an-hour later, Federal Reserve Bank of Philadelphia President Patrick Harker will speak on the economic outlook before the Risk Management Association Philadelphia Chapter Meeting, in Philadelphia, in U.S.

At 12:15 pm ET, Federal Reserve Bank of Cleveland President Loretta Mester will deliver a speech on “The Outlook for the Economy and Monetary Policy” before the SOMC Fall Meeting: “Have We Dodged the Bullets?”, in New York, U.S.

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