UK retail sales surprise in a good way

After a poor start yesterday, following disappointing UK GDP data, sterling has found some friends again this morning. The reason for that is the release of much stronger-than-expected retail sales data. In the year to January, High Street sales were up 0.7%, which doesn’t sound impressive until you notice that is only the 2nd month of retail sales growth since April 2022. Also, the markets had forecast a 1.4% contraction. Even more impressive is the fact that core retail sales, devoid of food and energy numbers, were also up 0.7% on the year. The market had been expecting a 1.6% contraction. So what we’re seeing is poor data for the latter part of 2023 and improving data for the first few weeks of 2024. The pound is back up to $1.2680 and €1.1690 on the back of this data and we have a speech from Huw Pill later today. He is the Bank of England’s Chief Economist. So his words can shift sentiment. On most other fronts, sterling is pretty steady. GBP/AUD is level at AUD 1.93, GBP/NZD is just above NZD 2.06 and GBP/CAD remains trapped below CAD 1.70.