For the second month running, UK retail sales data was notably weaker than expected

For the second month running, UK retail sales data was notably weaker than expected with a 0.3% decline in volumes for January from a revised 2.1% decline the previous month and expectations of a 0.9% monthly gain.The annual increase slowed sharply to 1.5% from 4.3% in December.

 

The sharp increase in fuel prices had an important impact in curbing volumes and the data overall will maintain overall expectations that higher prices during 2017 will have an important impact in undermining sales growth which will undermine the wider economic growth trends.

 

Sterling weakened further after the data with the Euro strengthening to the 0.8580 area while the UK currency retreated to lows below 1.2400 on reduced expectations that the Bank of England would tighten policy.

 

There was some resilience at lower levels and the UK currency held above 1.2400 on Monday as the Euro retreated to below 0.8550.