GBP/USD Falters as UK Retail Sales Numbers Miss Across the Board
- UK spending in January fell below market expectations as higher fuel and food prices hit.
- Retail sales data remain notoriously volatile with revisions commonplace.
The British Pound fell Friday morning after January UK retail sales data disappointed with the monthly numbers falling into negative territory. While the series is volatile and prone to revisions, the underlying trend paints a negative picture for GBP in the coming months.
In January retail sales grew by 1.5% y/y, against expectations of 3.4% and a prior month’s reading of 4.1%. On a monthly basis, sales fell by 0.3% compared to expectations of a 1.0% rise and December’s fall of 2.1%.
Commenting on today’s official retail figures, Kate Davies, ONS Senior Statistician said:“In the three months to January 2017, retail sales saw the first signs of a fall in the underlying trend since December 2013. We have seen falls in month-on-month seasonally adjusted retail sales, both in conventional stores and online, and the evidence suggests that increased prices in fuel and food are significant factors in this slowdown.”
Looking ahead, retail sales will need to rise in excess of 2% over the next two months in order to prevent retail sales dropping in Q1 and dragging on GDP growth.
According to Howard Archer at IHS Markit, “The economy’s persistent resilience since last June’s Brexit vote has been largely built on consumers keeping on spending. If consumers really are now beginning to moderate their spending, the long anticipated slowdownin the economy may be about to materialize.”
GBPUSD, already under downward pressure, slipped lower and looks likely to test the 1.23 handle shortly with Wednesday’s low of 1.23832 the first target.
Chart: GBPUSD 3-hour Time Frame (February 09 - 17, 2017).
--- Written by Nick Cawley, Analyst
To contact Nick, email him at Nicholas.firstname.lastname@example.org
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