UK Retail Sales disappoint

By Matthew Boyle

The Pound has dipped this morning following this morning’s UK retail sales release showing figures in December at -3.2%, which were well under the expectations of -0.5%. With the Pound benefitting from inflation figures on Wednesday (showing it had risen slightly again to 4% so lowering expectations the Bank of England will cut interest rates any time soon) – this poor reading has eroded much of GBP’s earlier gains. With the ongoing cost of living crisis in the UK it is perhaps unsurprising that retail sales were poor over Christmas, however this reading was well under any estimates, but more concerning was the year-on-year figure which came in at -2.4% when a figure of 1.1% growth was expected. Rising interest rates and inflationary pressures have clearly impacted UK consumers and their wallets, dramatically reducing spending in the high street and online.

This morning’s retail sales release will likely dominate market sentiment for trading today but later this morning we have ECB President Lagarde speaking where markets will look for any hints towards their ongoing interest rate programme. This afternoon we have consumer sentiment date from the US which could well be a mover for rates buying or selling from the greenback.

Whilst it has been a fairly cold start to the year for both the UK and the Pound, things are starting to heat up. GBP>USD and particularly GBP>EUR have performed within tight ranges for several months now and at some point, will inevitably break outside the price points they operated within. With GBP>EUR rates close to the best they have been in almost a year and GBP>USD the best in several months now is far from a bad time to secure funds should you have an upcoming transfer. As political uncertainty in the UK grows daily and we weather the freezing cold, markets are heating up and will bring with it volatility, the only question being when.

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