Pound Sterling strengthens on strong UK Retail Sales, soft US core PCE report
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Pound Sterling strengthens as strong UK retail sales data has deepened persistent inflation fears. Fears of a technical recession have escalated as UK Q3 GDP was downwardly revised to a 0.1% contraction. BoE policymakers may continue to endorse higher interest rates. The Pound Sterling (GBP) extends its recovery on Friday, supported by upbeat UK Retail Sales data for November. The Office for National Statistics (ONS) reported that households’ retail spending surprisingly remained positive compared with the previous year, while market participants projected a sharp decline. Strong Retail Sales were boosted by a 2.8% increase in non-food retail stores as major discounts were offered amid the Black Friday Sale. The upbeat Retail Sales data for November is likely going to allow Bank of England (BoE) policymakers to stick to their restrictive monetary policy stance. The growth rate in wages is still significantly higher than required to bring down inflation to 2%, and this appears to be empowering households to spend heavily. This could dampen confidence in a clear downtrend in price pressures. The sharp recovery in the Pound Sterling suggests investors have ignored the downbeat Q3 Gross Domestic Product (GDP) revision, which points to a 0.1% contraction. This has deepened fears of a technical recession in the UK economy as the BoE has projected a stagnant performance in the last quarter of 2023. After the release of the economic data, Finance Minister Jeremy Hunt said that “The medium-term outlook for the UK economy is far more optimistic than these numbers suggest”. Daily digest market movers: Pound Sterling recovers as US Dollar hits by soft US core PCE report The Pound Sterling picks strength after the release of the upbeat UK Retail Sales data for November. Monthly Retail Sales grew at a stronger pace of 1.3% against the consensus of 0.4% and a stagnant performance in October. The annual consumer…
Filed under: News - @ December 22, 2023 7:26 pm