UK Retail sales did not make for a very merry Christmas but it would be fair to say the December release was evened out with the November numbers. As pointed out in the video update earlier, patterns of consumption have changed with online shopping so a better/fairer guide maybe to take the 2 months together. However, the November numbers were revised lower which certainly didn’t help the Pound.
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Nonetheless, it was the borrowing numbers that were the big surprise. The government borrowed £7.5bn in December, £4.3bn lower than the year before. The lower borrowing was largely because of increased income tax, national insurance and VAT revenues. The proud Pound appeared set to dive on the Retail sales figures, but was buoyed on the borrowing numbers and we currently sit just below the weekly high on GBP/EUR and GBP/USD.
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