UK news was dominated by the terrorist attack at Westminster in the middle of yesterday afternoon. The pound fell sharply against the euro as initial reports came in, but recovered the losses by the end of the day.
Sterling traded close to its strongest level against the US dollar in nearly a month. The move higher followed on from the bittersweet inflation numbers seen on Tuesday. Bitter because inflation accelerated to 2.3% in February, exceeding the Bank of England’s (BoE’s) 2% target for the first time since 2013, but potentially sweet if it increases the chance of an interest rate rise. In addition there has been scepticism in the US about President Donald Trump’s ability to push through pro-growth policies, and this undermined the US dollar.
Coming out today are the key UK retail sales figures from the Office for National Statistics. This covers the level of consumer spending in the UK in February and is an indication of British people’s confidence in the economy. With inflation soaring there is the risk that retail sales will disappoint today and miss the forecast level of 0.4%, continuing the disappointing figures from the past two months.