020 7898 0500In recent weeks data from the UK has painted a less morbid picture than the outcome of the Brexit referendum suggested. The trend of positive and forecast-beating data readings came to end, however, in the early hours of Tuesday morning, when the British Retail Consortium (BRC) reported that retail sales declined in August after increasing in July. The BRC said that sales for all stores declined 0.3%, against a 0.1% increase in August last year. This is the weakest performance since September 2014 (excluding Easter distortions) and a complete contrast to other readings that have been posted about the sector. It highlights the uncertain path that the UK will be treading over the next couple of years.
Official data on August retail sales are due next Thursday. The July figures showed sales growing strongly as warm weather boosted summer clothing sales and a weak pound encouraged overseas visitors to spend. It will be interesting to see if the official numbers mirror those from the BRC. If they do, then UK optimists may well be taking down the bunting from last week.
The day ahead is likely to affect the relative strength of sterling. In the morning, the latest indicator on the manufacturing sector is due for release and expected to show that the pace of decline has picked up. However, the key event for the day will be the quarterly inflation report. During these hearings the BoE Governor and several Monetary Policy Committee members testify on inflation and the economic outlook before Parliament’s Treasury Committee. The market will be deciphering the rhetoric for some clear signposting on future policy action.
