The Pound Sterling to US Dollar (GBP/USD) exchange rate strengthened from a 15-month low on Thursday as data showed that UK retail sales growth surged to a ten-year high thanks to a bumper Black Friday and as retailers slash prices.
UK Retail Sales Soar
According to the Office for National Statistics (ONS), retail sales including fuel surged by 1.6% in November, the biggest rise of 2014, and sales excluding fuel rose by 1.7% on a monthly basis. On an annual basis, sales excluding fuel rose jumped by 6.9% and sales including fuel leapt by 6.4%. Economists had been expecting a monthly increase of just 0.3% and an annual rise of 4.4%.
‘Black Friday’s shopping frenzy provided the sector with a timely boost and retailers will hope that this momentum is maintained throughout the festive period. A combination of aggressive discounting and consumer’s determination to secure big-ticket bargains ensured that electrical goods and household appliances were the standout categories. Clothing and footwear retailers used the event to reduce stockpiles of winter clothing, albeit to the detriment of their profit margins,’ said Keith Richardson, Managing Director Retail Sector at Lloyds Bank.
Sales of household goods were shown to have increased by 17% on a yearly basis, the largest increase seen since the late 1990’s. On a monthly basis they increased by 3.6%.
Electrical stores recorded a record 32% annual increase in sales volumes and department stores reported sales up by more than 15% both the biggest increases since records began in 1988.
Clothing and footwear sales also rose by 3.8% on a monthly basis in November, and food sales rose 0.4%, that figure is expected to improve strongly in next month’s report due to the Christmas holidays.
The ONS also reports that average store prices fell by 2.0% in November 2014 compared with November 2013. This is the largest fall since August 2002 and contributing to falling inflation in the UK.
Federal Reserve Meeting Softens US Dollar
The US Dollar softened against a number of peers as investors took comments made by the Federal Reserve to mean that an interest rate hike is not imminent. As a result, emerging market and perceived riskier assets firmed.
The GBP/USD exchange rate is forecast to continue to trade near a 15-month low as market attention turns to US jobs and services purchasing manager index (PMI) data.
Sterling could give up ground on Friday if Gfk consumer confidence data falls for a second consecutive month.
The Pound Sterling to US Dollar (GBP/USD) Exchange Rates
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5668.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.2762.
The US Dollar to Euro (USD/EUR) exchange rate is currently trending in the region of 0.8147.
