The latest consumer spending figures for the UK have come in better than expected with retail sales for July rising by just 0.7% month-on-month. Against consensus forecasts for a rise of 0.2% this is a clear beat and unsurprisingly we’ve seen a pop higher in the pound almost immediately. Clothing sales and the good weather both contributed to the improvement, after a 0.5% decline for the previous month with England’s world cup heroics likely boosting sales of beer and waistcoats.
Looking at the bigger picture a year-on-year increase of 3.5% compared to 2.9% forecast is no doubt pleasing and while there may have been some one-off factors which contributed to the improvement it is a solid data point nonetheless. After reaching its lowest level against the US dollar in over a year below $1.27 yesterday the pound clearly remains under pressure, but this release has caused a positive, albeit small, reaction which may hopefully lay the foundations for a more sustained recovery in sterling.
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