Has Resilient UK Data come to an End? Pound Tumbles along with Retail Spending

17 February 2017 by News Desk   |   SHARE  

The pound fell in Friday’s European session with the revelation that UK retail sales dropped significantly. January registered a -0.2% contraction according to the Office for National Statistics (ONS) in opposition to the 0.7% growth it was expected to show. Moreover, the annual figure fell from the previous 4.7% to 2.6% in January – a much greater fall after economists had predicted a 3.9% reading.

The fall is expected to be a mixture of rising inflation and a weaker pound and industry experts have suggested this may worsen in coming months as hedging contracts end. Since the initial Brexit vote, the UK economy has remained surprisingly resilient causing some to speculate whether Britain’s exit from the EU would cause too much disruption.

However, it seems even before Article 50 has been officially triggered UK citizens have been tightening their purse strings. Higher inflation is squeezing UK consumers and economists are suggesting this year could be a difficult one for residents as Brexit officially gets underway. Retail sales have now fallen for three months in a row for the first time in two decades. Although a knock to consumer spending was expected, it’s going to be difficult to predict how significantly it will weaken as changes begin to take place in a post-European Union membership landscape.

Disclaimer: This economic update is provided by FC Exchange a Global Reach Group Company, industry leaders in foreign exchange. Authorised affiliates are permitted to reuse content.

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