Although the Pound stumbled yesterday as UK house prices declined unexpectedly the British asset was able to enjoy a rebound during the European session as domestic retail sales leapt in December.
While economists had envisaged a month-on-month sales gain of 0.3 per cent in December – following an advance of 0.2 per cent in November – sales actually surged by 2.8 per cent.
On the year sales were 6.1 per cent higher, a considerably stronger result than the 3.2 per cent annual advance expected and the best result for nine years.
Sales including autos were up 2.6 per cent in the month and 5.3 per cent on the year.
The impressive result was largely due to encouraging sales growth in the UK’s smaller stores and adds to the brightening picture of the UK’s economic recovery which has been forming over the last few months.
Although the obvious impact of the festive period must be taken into account, the figures contrast markedly with the disappointing Christmas sales data published by some of the UK’s major supermarkets.
Given that UK manufacturing, construction and services output data for December failed to reach the levels expected, implying that the pace of expansion slowed at the close of the year, this result is especially welcome.
As economist Alan Clarke observed; ‘This is not about to propel GDP up to above 1 per cent in the fourth quarter. Nonetheless it is a helpful outcome in the face of the dive in construction.’
November’s retail sales including autos figure was negatively revised to a gain of 0.1 per cent rather than a gain of 0.3 per cent.
Shortly after the data was published the Pound advanced by the most for a month against its US counterpart and surged by 0.7 per cent against the Euro.
Gains against the Euro were aided by the news that construction output in the Eurozone declined in November, albeit at a slower pace than in the previous month.
Next week the most influential UK reports to be aware of include business optimism, employment figures, the publication of the Bank of England’s meeting minutes, UK reported sales data and BBA loans for house purchase statistics.
Given the growing speculation surrounding the odds of the Federal Reserve tapering stimulus when it meets at the end of the month, developments in the US will also be of interest.
Pound Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,US Dollar,1.6448 ,
Pound Sterling,,Euro,1.2101,
Pound Sterling,,Australian Dollar,1.8722 ,
Pound Sterling,,New Zealand Dollar,1.9873 ,
US Dollar,,Pound Sterling,0.6081 ,
Euro,,Pound Sterling,0.8276 ,
Australian Dollar,,Pound Sterling,0.5390 ,
New Zealand Dollar,,Pound Sterling,0.5074,
[/table]
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