UK Retail Sales
The UK Retail Sales report showed a larger-than-expected decline in June, with household consumption contracting 1.2% following the 2.9% expansion the month prior.
UK Economic Calendar – June 19, 2024
The update from the Office for National Statistics (ONS) showed a 2.1% drop in non-food store sales, with food sales falling 1.1%, while spending on automotive fuel increased 2.2% during the same period. A deeper look at the report showed the ‘total spend, the sum of in-store and online sales, fell by 1.3% over the month, the proportion of sales being made online decreased from 27.5% in May 2024 (revised from 27.2%) to 27.1% in June 2024.’
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GBP/USD Price Chart –15 Minute
Chart Prepared by David Song, Strategist; GBP/USD on TradingView
GBP/USD struggled to hold its ground following the larger-than-expected drop in UK Retail sales, with the exchange rate extending the decline from earlier in the week. As a result, GBP/USD closed the week at 1.2934, with the weakness in the exchange rate carrying into the last full week of July.
Looking ahead, the UK Retail Sales report is anticipated to show a rebound in July, with private-sector consumption projected to increase 0.5% following the 1.2% contraction the month prior.
A recovery in household spending may push the Bank of England (BoE) to the sidelines following the 25bp rate-cut earlier this month, and a positive development may generate a bullish reaction in the British Pound as it raises the central bank’s scope to keep UK interest rates on hold at its next meeting on September 19.
At the same time, a softer-than-expected UK Retail Sales report may put pressure on the Monetary Policy Committee (MPC) to further support the economy, and a dismal development may produce headwinds for the British Pound as it fuels speculation for another BoE rate-cut in 2024.
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--- Written by David Song, Strategist
Follow on Twitter at @DavidJSong
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