Summary:
- Retail sales smash expectations in May being driven by the royal wedding as well as warm weather
- Household goods stores experience the largest sales increase in terms of value
- British pound soars, the upward trend resumption getting more possible
UK retail sales surged in May beating expectations provided by economists surveyed by Bloomberg as the royal wedding together with warm weather encouraged Britons to go shopping. The pound soared immediately after the release being the best major currency in late morning trading.
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Retail sales jumped last month fuelled by the royal wedding as well as warm weather. Source: Macrobond, XTB Research
May’s retail sales increased 1.3% beating the consensus at 0.5% in a monthly basis while core sales stripping out auto fuel rose also 1.3% while the median estimate had pointed to a 0.3% pick-up. It resulted in a really impressive jump in annual terms as sales surged 3.9% and 4.4% in terms of headline and core respectively. On top of that, there were upwards revisions to the April’s report, and headline sales were adjusted to 1.8% from 1.6% while sales excluding auto sales were revised to 1.4% from 1.3% - both in monthly terms. The largest yearly increase was witnessed in household goods stores where sales jumped 9.3% in terms of value followed by a 4.5% increase in total non-food stores. Among reasons standing behind such an incredibly upbeat reading one may single out above-average temperature, the wedding of Prince Harry taking place on 19 May as well as the FA Cup Final. A glance at the chart above tells us that UK consumers might be already out of the woods suggesting that the second quarter growth could bounce back. By and large, the release might be classified as a bullish one for the pound therefore, assuming a gradual decrease in the US dollar from the current levels, we stick to the view the GBPUSD could strengthen over time.
The GBPUSD seems to be getting more encouraging from a buyers’ standpoint. The pair drew two bullish candlesticks, and now it’s aiming to break 1.35. More gains could come when US dollar bulls finally give up. Source: xStation5
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