020 7898 0500Despite the positive reading we saw for UK retail sales, sterling still came under pressure. Retail sales rose by more than expected in June, posting a reading of 0.6% against an expectation of 0.4%. The positive reading was largely because of a particularly warm June which boosted the sale of clothing.
Retail sales is a key economic reading as consumer spending makes up to close to 75% of the Gross Domestic Product number. However, economists were quick to warn that market should not get carried away with the figure as it was a seasonal move and real wages are sliding against inflation.
In the meantime, sterling remains vulnerable following the decline in inflation, which in turn reduces the likelihood of a rate hike. In addition the EU’s chief Brexit negotiator has urged the UK to be more forthcoming. He has asking for more ‘clarity’ on key issues, such as citizen rights and the ‘divorce bill’.
Looking to the day ahead, we have the public sector borrowing numbers.
