The British Pound Rises on Economic Data

[Ben Graham]

The British pound rose slightly after data showed that the UK private sector expanded faster than expected in October, with economic indicators showing no signs of anxiety ahead of the almost inevitable tax increases in the Labor government's budget next month.

According to preliminary estimates published on Friday, the S&P Global composite PMI rose to 51.1 from 50.1 in the previous month. The figure came in above economists' forecast of 50.5 and remained above the 50.0 threshold, which indicates growth. The most notable improvement was seen among British manufacturers, who returned to expansion for the first time since October last year.

This surge of optimism in the UK economy, like a ray of sunlight through the clouds, offers hope for further recovery. The growth of the manufacturing sector, which has long struggled under the weight of inflation and trade tariffs, is a particularly important signal. Businesses appear to have adapted to the new environment and are once again finding opportunities for development. Despite these positive trends, caution remains warranted. Global economic risks — including geopolitical tensions and the potential for recession — still pose serious threats to the UK economy. It is important that the government continues to support businesses, creating favorable conditions for investment and innovation.

It is clear that companies have become more optimistic about their growth prospects for the coming year, despite mounting expectations that on November 26, Chancellor of the Exchequer Rachel Reeves will raise taxes by billions of pounds. This stands in stark contrast to the situation a year ago, when confidence plunged ahead of Labor's first budget, amid repeated ministerial warnings about "difficult decisions" to come.

According to Office for National Statistics (ONS) data released earlier on Friday, retail sales unexpectedly rose in September thanks to strong demand for home goods and jewelry. A GfK survey conducted the night before also showed that consumer confidence in October climbed to its highest level recorded in 2025, while the component tracking intentions to make major purchases reached its highest level since early 2022.

GBP/USD Technical Outlook

As for the current technical picture of GBP/USD, buyers need to break above the nearest resistance at 1.3350. Only this will allow a move toward 1.3385, a level that may prove difficult to overcome. The ultimate target will be the 1.3420 level.

In case of a decline, bears will attempt to regain control of 1.3315. If they succeed, a breakout below this range will deliver a serious blow to bullish positions and push GBP/USD toward the 1.3280 low, with the prospect of extending the fall to 1.3250.

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