UK Retail Sales Soar in January to Erase December Slump, GBP Unfazed

Pound Sterling (GBP/USD) Analysis

• UK retail sales rose an impressive 3.4% to overcome Decembers 3.3% decline

• GBP/USD unphased by the report after a busy week, filled with data

• Fed speakers, US PPI and the University of Michigan consumer sentiment report up next

UK retail sales rose an impressive 3.4% in January, recovering Decembers surprising drop of 3.3%. The dismal December print was chalked up to Christmas gifts being bought during the Black Friday discounts in November and partially due to plans to spend less in light of the cost of living, according to nearly half of surveyed respondents.

The positive news comes just one day after the UK confirmed its economy had dipped into recession in the final quarter of 2023. Also this week, inflation was unchanged and the labour market proved resilient, just a few stats that will likely see Bank of England officials towing the line when it comes to rate cut expectations.

Consumers landed up paying more for less as the ‘value’ statistic, which captures the price aspect of sold items, rose faster (3.9%) than the volume component (3.4%).