UK retail sales pick up in January, GBP at critical place

11:28 15 February 2019

Summary:

  • UK retail sales in January came in above expectations spurred by spending on clothing

  • The recent data have been mixed, Brexit takes precedence though

  • GBP trades at a critical place following the release

Strong start to 2019

UK retail sales surprised to the upside at the beginning of this year being spurred by increased purchases of clothing. Despite the robust release the British pound keeps moving sideways being slightly up against the US dollar at the time of preparing of this analysis.

Retail sales jumped in January reaching its fastest pace in six months. Source: Macrobond, XTB Research

Headline sales rose 1% MoM in January smashing the median estimate of a 0.2% MoM increase. At the same time core inflation, stripping out auto fuel, moved up 1.2% MoM, also well above the consensus of a 0.2% MoM rise. On top of that, we got upward revisions to the December’s data where headline sales were revised to -0.7% from -0.9%, while core sales were revised to -1% from -1.3%. The details showed that clothing sales picked up as much as 2.1% mainly due to substantial discounts following Christmas. The data released by the ONS showed an upward revision for the fourth quarter sales which saw no change compared to a previous estimate of a 0.2% decline. It also needs to be said, having in mind the yesterday’s gloomy release from the United States, that a change in consumers’ preferences is increasingly visible in retail sales data across various economies around the world. Black Friday could be blamed for such a change. The data was more or less negligible for the pound which keeps being driven by Brexit developments.

Technical analysis

Looking at the daily chart of the GBPUSD one may notice that the price is struggling around the important support line - 75SMA. This line is also underpinned by the 50% retracement of the latest bullish wave. Therefore, one may expect the pair could recoup some of its losses in the upcoming days. However, Brexit-related headline will ultimately hit the wires again having the “meaningful vote” scheduled for February 27. Source: xStation5

This content has been created by XTB S.A. This service is provided by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. XTB S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.

Back

Join over 1.6 Million investors from around the world