"After a disappointing couple of months, sales volumes in December recovered their sparkle, beating retailers' expectations"
- Barry Williams, who chairs the CBI survey panel and is a senior executive at Asda
The Sterling rested in the negative territory on Thursday against the U.S. Dollar as data from the ONS showed retail sales came in line with analysts' forecasts in November, albeit figure was significantly stronger than the previous month's reading.
Sales at British retailers ticked up 0.3% from October, when they fell a revised 0.9%. On a yearly basis, sales gained 2%. The main upside pressure came from clothing and footwear stores, where sales surged 3.8% on a monthly basis, posting the largest gain since April 2011. Moreover, core retail sales, which strips out fuel, edged up 0.4%, beating expectations for a 0.3% gain. Despite solid gains, retail sales are highly volatile from month to month, fluctuating around +2% and –2% since 2009, hence, the market reaction was expected to be modest.
Nevertheless, the improvement supports Mark Carney's comments the economy is "taking hold". The U.K. GDP expanded 0.8% in the third quarter, and on the back of stronger fundamental data the economic output is likely to accelerate this quarter. The last but not least, is the improving outlook for consumer spending, as inflation moved closer to the 2% threshold level, while unemployment fell to the lowest in 4 and 1/2 years.
© Dukascopy Bank SA