UK retail sales rise for 3rd month in a row

A third consecutive monthly increase in UK retail sales has provided further support to the pound which has had a fairly quiet week after the recent fireworks. The FTSE 100 is little changed on the day and remains close to its weekly high.

Data lends further support to GBP rally

UK retail sales in August rose by the most in 4 months, in what is another positive data point for the pound. A rise of 1.0% m/m is well above the consensus forecast for a 0.2% increase and the news has been warmly greeted by sterling traders with the pound popping higher immediately after the release. The pound has pulled back a little so far this week following the stellar gains seen last time out but this morning’s data provided a further catalyst for pound strength with the GBPUSD rising back close to last week’s high around the 1.36 handle before settling into the middle of its range as the morning wore on. Looking forward, this evening’s Fed rate decision could well be hugely significant for the USD which may in turn cause a change in the main driving force for this pair, which has been following the lead of the pound for the past week.   

GBP and FTSE moving inversely

The appreciation in the pound weighed on the FTSE 100, with the benchmark dropping back lower following the release after earlier rising to its highest level of the week shortly after the open. Similar to the pound, the market has now settled into the middle of its range but the index remains below the key 7300 level and could well come under more selling pressure going forward, especially if the pound takes another leg higher.

Retail stocks lead the risers

Several of the best performing blue-chips in London this morning are those in the retail sector with Marks & Spencer and Tesco building on yesterday’s gains. Next is also on the rise, with the clothing company honing in on its 2017 peak which was recorded just last week. Elsewhere, Diageo has seen its stock come under pressure after the beverage company warned its first-half sales growth is likely to suffer. The maker of Johnnie Walker whisky and Guinness expects the timing of the Chinese New Year as well as a ban on selling alcohol near Indian highways to weigh on its results and the stock has slid some 2% in response.