GBP/USD is trading heavy above key support at 1.3000. Disappointing UK economic activity and the expected fiscal drag from the upcoming UK budget leave room for the BOE to deliver more easing than is currently priced-in (63bps in the next 12 months). As such, we expect GBP to keep underperforming on the crosses, BBH FX analysts report.

UK manufacturing shows modest strength amid broader slowdown

"UK retail sales growth falls more than expected in October with retailers reporting that consumers held back in preparation for Black Friday discounts. Total retail sales volumes dropped -1.1% m/m (consensus: -0.2%) vs. 0.7% in September (revised up from 0.5%). Excluding auto fuel, retail sales volumes declined -1.0% m/m (consensus: -0.5%) vs. 0.7% in September (revised up from 0.6%)."

"UK private sector growth almost stalls in November. The composite PMI dropped to a 2-month low at 50.5 (consensus: 51.8) vs. 52.2 in October, reflecting a sharp loss of momentum in the service sector. The services PMI plunged to a 7-month low at 50.5 (consensus: 52.0) vs. 52.3 in October while the manufacturing PMI increased to a 14-month high at 50.2 (consensus: 49.2) vs. 49.7 in October."

"The UK fiscal backdrop worsened in October. Borrowing in the financial year to October was £116.8 billion; this was £9.0 billion more than in the same seven-month period of 2024, and £9.9 billion more than the Office for Budget Responsibility projected in March. To shore up the deteriorating fiscal position, the UK government will likely prioritize tax hikes over spending cuts in the budget due on November 26."