UK Retail Sales give brief spike for Sterling

25 May, 2018

Rob Bastin

As the busy week for UK data continues, Thursday provided the latest Retail Sales figures for the month of April. With better weather around analysts were hopeful of a return to monthly growth of 0.7% after a very poor run of figures in Q1. Actual results surpassed all expectations with growth in April at 1.6% and subsequently 1.4% year on year. The stronger figures gave the pound a much-needed boost after the weaker Inflation data on Wednesday, although any gains were eradicated by close of business as negative trends and poor sentiment continue to affect Sterling exchange rates. Days like yesterday highlight the importance of acting on any spikes as in the current market opportunities are not only a few and far between but often very short lived. Struggling Brexit negotiations and the fear of a snap election remain an ongoing deterrent to investors and as such exchange rates are not seeing any desired improvements.

Elsewhere the Euro has been struggling of late with concerns over the new Italian coalition government that is taking a long time to get to any agreements. Latest reports, however, suggest that a deal could be just days away now, something that would be expected to bring confidence back into the Euro and could see it make short-term gains against the Pound and US Dollar.

This morning’s focus is back on the UK, with the latest revised Q1 growth figure which is currently struggling at just 0.1% from January to March. There are no expectations for any changes to this figure leaving the pound further exposed unless a surprise upward revision is delivered. With lowering Inflation and very low growth, the prospects of another rate hike this year have very much faded with many forecasting rates will not change again until late in 2019. Today is otherwise quiet for data although there are a few more speeches from Central Bank members around the world, notably from the BoE, ECB and Federal Reserve.