British Pound Tumbles on Disappointing UK Retail Sales
- GBPUSD dropped Friday after news that UK retail sales in December fell by more than expected
- From 1.2326, the pair was trading below 1.2300 half an hour later
The British Pound fell sharply Friday after news that UK retail sales declined by 1.9% in December rather than the 0.1% predicted. It was the biggest monthly drop in sales since April 2012 and it helped weaken GBPUSD from an early European session high at 1.2367 to well below 1.23.
Chart: GBPUSD 5' Timeframe (January 20)
The Pound weakened against the Euro too, with EURGBP jumping from a session low of 0.8628 to a high at 0.8667. However, the data also showed UK retail sales expanded by 1.2% quarter-over-quarter in the final three months of last year, making a positive contribution to economic growth.
“Retailers saw a strong end to 2016 with sales in the final quarter up 5.6% on the same period last year, although the amount bought fell between November and December once the effects of Christmas are removed,” noted Kate Davies, senior statistician at the Office for National Statistics. “There were some notably strong figures from smaller retailers, in particular butchers, who reported a significant boost in sales in the run up to Christmas,” she added.
Nonetheless, December’s fall in sales does suggest that the UK public may at last be reacting to the Brexit decision to leave the EU, rising UK inflation squeezing real incomes growth and the likelihood that the labor market will soften.
--- Written by Martin Essex, Analyst and Editor
To contact Martin, email him at email@example.com
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