The latest UK retail sales release has shown a much larger than expected 1.8% decline month on month for March. To put this release in a historical context this morning’s number was the largest monthly decline since the data for December and you have to go back to early 2012 to find another worse print. However there are some mitigating factors which could be seen as meaning that this isn’t as bad news as it first appears.
Firstly, it should be pointed out that this data relates to March so is lagging in nature. Earlier this week we got more pertinent figures with several positive reports of a better than expected level of retail spending over the Easter weekend with Barclaycard reporting a 13% increase for in-store purchases on last Friday and Saturday. Secondly, due to the month on month nature of the release, the prior strong print of +1.7% (which today was revised higher from +1.4%) will weigh on this one in relative terms.
There has been a mild negative reaction in the pound which has fallen back below the 1.28 handle against the US dollar since the release but this data point alone doesn’t seem to present enough of a reason for the market to change course and price remains substantially higher on the week following Tuesday’s sharp rally and looks well supported going forward.
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