- Samuel Tombs, UK economist at Capital Economics
Sales at the nation's retailers is the primary gauge of consumer spending, which represents a vast majority of overall economic activity. Therefore, stronger-than-expected data can have a high market impact. This week, the ONS said the volume of sales rocketed 1.7% in February from a month ago when they plunged 2.0%, and also smashing analysts' projections for a 0.5% increase. On a yearly basis sales advanced 3.7%, while core sales soared 4.2%, both surprising markets to the upside. The largest contribution came from food sales, which represent for 42p of every Pound spend in the industry. Thursday's figures forced analysts to revise their first quarter growth, saying the retail sector will provide a significant boost to the Pound.
A majority of consumers that was buoyed by the improving housing market has been the driving force behind the nation's rapid growth, even despite their income has been squeezed by weak growth in wages and high inflation. The strain on consumers, however, is likely to ease, as amid inflation below the official target of 2%, wage growth is likely to pick up, providing additional boost to spending. Soon after the cable soared to 1.6640, and even strong U.S. growth and positive figures from the labour market were not able to limit pair's appreciation, with GBP/USD reaching 1.6646. The next strong resistance can be found at 1.6653.
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