August 23, 2021

GBP Trader Frustration Continues, UK Retail Sales Drop Sharply

 UK retail sales unexpectedly posted a sharp fall in July, signaling that a strong recovery in the country is likely to lose momentum.

Data from the UK’s Office for National Statistics (ONS) reported that total retail sales fell by 2.5% last month, after an increase recorded in June of 0.2%.

This figure is in line with weaker inflation readings earlier in the week, thus easing pressure on the Bank of England (BOE) to withdraw its stimulus measures.

The central bank has warned that rising consumer prices may double from its target by the end of the year, but slower spending rates mitigate that risk.

According to the ONS, food sales declined 1.5% last month after a 3.9% rise in June during the Euro 2020 football tournament which prompted more people to spend.

While petrol and diesel sales were reported to be down 2.9%, the first monthly decline since February, due to heavy rains in early July that affected the volume of traffic on the roads.

The pound continued to weaken to a one -month low following the release of the data, trading around 1.3613 against the strong US dollar.