BREAKING: UK Retail Sales rise 0.5% MoM in September vs. -0.2% expected
The United Kingdom (UK) Retail Sales climbed 0.5% month-over-month (MoM) in September after advancing 0.6% in August (revised from 0.5%), according to the latest data published by the Office for National Statistics (ONS) on Friday.
Markets projected a 0.2% decline in the reported month.
The core Retail Sales, stripping the auto motor fuel sales, increased 0.6% MoM in September, compared with the previous rise of 1.0% (revised from 0.8%).
The annual Retail Sales in the UK climbed 1.5% in September versus 0.7% prior, above the consensus of 0.6%. The annual core Retail Sales jumps 2.3% in the same month versus a 1.3% rise prior (revised from 1.2%). This reading came in better than the market expectations of 0.7%.
Market reaction to the UK Retail Sales report
The Pound Sterling attracts some buyers following the upbeat UK Retail Sales report. The GBP/USD pair is trading 0.03% lower on the day at 1.3318 as of writing.
Pound Sterling Price This week
The table below shows the percentage change of British Pound (GBP) against listed major currencies this week. British Pound was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.53% | 0.84% | 1.62% | -0.03% | -0.14% | -0.18% | 0.55% | |
| EUR | -0.53% | 0.31% | 1.17% | -0.55% | -0.57% | -0.78% | 0.03% | |
| GBP | -0.84% | -0.31% | 0.61% | -0.86% | -0.88% | -1.08% | -0.29% | |
| JPY | -1.62% | -1.17% | -0.61% | -1.70% | -1.79% | -1.87% | -1.18% | |
| CAD | 0.03% | 0.55% | 0.86% | 1.70% | -0.07% | -0.23% | 0.57% | |
| AUD | 0.14% | 0.57% | 0.88% | 1.79% | 0.07% | -0.21% | 0.57% | |
| NZD | 0.18% | 0.78% | 1.08% | 1.87% | 0.23% | 0.21% | 0.80% | |
| CHF | -0.55% | -0.03% | 0.29% | 1.18% | -0.57% | -0.57% | -0.80% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
This section was published on October 24 at 04.10 GMT as a preview of the UK Retail Sales release.
The UK Retail Sales Overview
The United Kingdom (UK) docket has the Retail Sales data for September to be released by the Office for National Statistics (ONS) on Friday, later this session at 06:00 GMT.
UK Retail Sales are expected to decline by 0.2% month-over-month (MoM) in September, swinging from a 0.5% increase seen in August. On an annualized basis, Retail Sales are seen rising 0.6% during the reported month, inching lower from 0.7% prior.
Core Retail Sales, stripping the basket of motor fuel sales, are anticipated to have climbed by 0.7% year-over-year (YoY), lower than the previous reading of 1.2%.
How could the UK Retail Sales affect GBP/USD?
UK Retail Sales data for September could contribute to the downward pressure on the GBP/USD pair amid signs of softer consumer spending. Even the surprise uptick may struggle to help the pair hold ground amid rising bets of more interest rate cuts by the Bank of England (BoE) in the remaining year.
The Pound Sterling (GBP) faced challenges after BoE Monetary Policy Committee (MPC) member Swati Dhingra signaled on Thursday that United States (US) tariffs could put downward pressure on prices in the medium term. The preliminary United Kingdom (UK) Purchasing Managers’ Index (PMI) data by S&P Global will be eyed later in the day. Attention will be shifted toward the US Consumer Price Index figures due on Friday.
Technically, the GBP/USD pair remains steady after five days of losses, trading around 1.3320 at the time of writing. The pair may target the two-month low of 1.3248, recorded on October 14, followed by the six-month low of 1.3141. On the upside, the initial barrier lies at the nine-day Exponential Moving Average (EMA) of 1.3365, followed by the 50-day EMA at 1.3433. A break above these levels would improve the short- and medium-term price momentum and open the doors for the pair to test the monthly high of 1.3527.
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
Author
Akhtar Faruqui
FXStreet
Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.
