Data this morning showed that U.K. retail sales rebounded last month, as the strong performance of the second-hand sector offset a drop in sales of clothes and footwear.
Retail sales grew +0.3% on the month in October, beating market expectations of +0.1% growth and bouncing back from September’s -0.7% declines.
Digging deeper, second-hand stores had a particularly strong month, driving the overall growth in sales. Clothing stores disappointing month can be attributed to unseasonably warm weather.
However, on an annual basis, retail sales posted its first decline in four-years, and was down by -0.3%.
Consumer price growth stood at +3% in October, the joint-fastest pace of inflation in nearly six-years.
Note: U.K’s economy has slowed visibly this year as consumers come under pressure from accelerating inflation driven by the pound’s steep decline in the wake of the Brexit referendum last year.
Sterling is trading a tad higher, but the gains are limited, as today’s data should not change investors’ expectations that the Bank of England won’t raise interest rates again any time soon, while concerns about Brexit uncertainty remains.
GBP/USD is last up +0.14% at £1.3189, up from £1.3159 before the release, and is expected to run into some strong offers just above the psychological £1.3200 handle. EUR/GBP trades down -0.3% at €0.8922.