Retail sales in the UK lower for a second month running

Retail sales in the UK lower for a second month running

For the second consecutive month, the UK retail sales data was much weaker than expected with volumes declining 0.3% in January following a revised 2.1% decline the previous month and expectations of 1.0% monthly advance. Annual sales growth declined to 1.5% from 4.3% previously.

Higher fuel prices had an important impact in curbing spending and the data maintained expectations that consumer spending would slow during 2017 and that the Bank of England would not move to raise interest rates.

Sterling came under pressure after the data with lows around 1.1640 in GBP/EUR before a retreat to 1.1715, but GBP/USD found support below the 1.2400 level.

Attention will tend to switch back to politics in the week ahead with the House of Lords debating the Bill to trigger Article 50.

The decision of Kraft-Heinz to abandon its attempt to buy Unilever had a slight negative impact on Sterling.