UK Retail Sales Preview: Will a third fall finally fell the pound? Yearly figure may steal the show

  • Economists expect UK Retail Sales to have plunged by 16% in April.
  • Viewing the impact of a full month of lockdown provides insights moving forward.
  • GBP/USD has room to fall after previously ignoring weak inflation and employment stats. 

Three strikes and the pound is out? Jobless claims leap by over 800,000 and annual inflation dropped to 0.8% – both worse than expected – yet without taking a toll on GBP/USD. The currency pair recovered amid hopes for a coronavirus vaccine. 

Consumption is a significant chunk of the economy and a plunge may already have a more significant impact. Headline retail sales dropped by 5.1% in March – the shuttering came into effect only on the 23rd of that month – and are now projected to collapse by an additional 16%. That would already be devastating.

March's fall was worse than the financial crisis and expectations show triple that plunge in April.

The statistics in March could have been worse without stockpiling ahead of the lockdown. Figures for April are already for an entire month and clean of distortions.

Prime Minister Boris Johnson announced a minor easing of the lockdown in early May and laid out ideas for additional moves in June and July. While the COVID curve is flattering, the road remains long to reopening. Therefore, there is a good chance that low levels of consumption will continue in May and June – making these figures a benchmark.

The yearly figures are also of interest and feed into estimates of the crash in Britain's economic output in the second quarter. Expectations for headline annual fall stand at a plummet of 22.2%. A decline of less than 20% could be encouraging while a stumble of over 25% could trigger depressing headlines, reinforcing forecasts for a horrible quarter.

The yearly fall may steal the show

GBP/USD potential reactions

Pound/dollar shrugged off the previous top-tier figures for April released earlier in the week. Will it do that again? Perhaps this time, the accumulation of bad news will already snowball to hit for sterling. 

Below expectations: A drop of around 20% in monthly sales and over 25% in year on year figures will likely have an adverse impact, as explained earlier. It would add pressure on the Bank of England to act. 

If data remains within expectations – it is essential to remember that ranges are wider than normally – sterling will likely ignore the data and return to moving to the tune of negative rates speculation and Brexit headlines. 

A smaller slide in expenditure – perhaps around 10% monthly and below 20% quarterly, sterling could bounce amid hopes that shoppers are more resilient – perhaps thanks to the government's successful furlough scheme. 


Retail Sales have likely plunged by double-digits in April. The pound has resisted previous top-tier releases but may succumb to pressure at this juncture – especially if the yearly figure misses estimates. 

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