UK Retail Sales Drop Despite Online Surge

UK Retail Sales Drop Despite Online Surge 

UK retail sales tumbled 8.2% in January from December, according to the Office for National Statistics. The decline is far bigger than the 2.5% drop predicted by City economists. Sales were down 5.5% when compared with January 2020. 

All non-essential shops had to shut again in January after a new lockdown was declared to stop the spread of new Covid-19 variants. This obviously affected sales, but not to the same extent as the first coronavirus lockdown last spring, when sales slumped by 22.2% in April compared with the pre-pandemic level in February. 

Sales fell in all sectors except for non-store retailers and food stores, which reported growth of 3.7% and 1.4% respectively. Online spending surged to 35.2% in January, the highest on record and up from 29.6% in December. All store types reported higher online sales, with supermarkets and other food stores reaching a historic high of 12.2% of sales made online. 

Positive News for the GBP 

A quick vaccine rollout and a brighter outlook for the economy have boosted UK consumer confidence to the highest level in almost a year. 

The UK consumer confidence index, a measure of how people view the state of their personal finances and wider economic prospects, rose 5 points to an 11-month high of minus 23 in February, according to closely watched data published on Friday by research company GfK. 

The uptick, based on data collected in the first 12 days of February, was stronger than the consensus forecast of a small rise to minus 27 from a Reuters poll of economists. 

The improved sentiment has fuelled hopes of a strong rebound in consumer spending. Joe Staton, GfK’s client strategy director, said that the jump in the headline confidence score, driven by a 14-point rise in the outlook for the economy over the coming year, made it “tempting to talk of a return to normality”. 

He said the two-point rise in consumers’ view of their personal financial situation was particularly encouraging, as this would feed through into spending and in turn “fuel the post-pandemic economy”. The rise in confidence was also underpinned by a five-point increase in consumers’ view of whether it was a good time to make major purchases. 

The GBP is up at market open to 1.3984 against the USD. 

The UK banking sector will be in focus today as NatWest posts annual earnings, following results from Barclays on Thursday. 

Keep an eye on the GBP crosses for an opportunity to trade! 

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