UK Retail Sales Stalled in March Amid Mixed Signals from the BoE

UK Retail Sales Report – March 2024

The UK economy was in the spotlight, with UK retail sales in focus.

UK retail sales unexpectedly stalled in March after increasing by 0.1% in February. Economists forecast retail sales to rise by 0.3%.

According to the Office for National Statistics,

• Automotive fuel sales surged 3.2% in March.
• Non-food stores sales increased by 0.5%
• Department store sales slid by 3.8%.
• Food store sales volumes declined by 0.7% in March.
• Non-store retailing fell by 1.5%.

Retail sales volumes increased by 1.9% in the three months leading up to March compared to the previous three months. Retail sales were up 0.8% year-on-year in March but remained 1.2% below pre-pandemic levels (February 2020).

Bank of England Monetary Policy Implications

Retail sales figures for March aligned with comments from Bank of England Governor Andrew Bailey.

The retail sales report came after the UK inflation numbers for March. Despite the hotter-than-expected inflation numbers, Bank of England Governor Andrew Bailey announced the UK remains on track to tame inflation.

However, sentiment across the Monetary Policy Committee is mixed. MPC member Sarah Greene spoke on Thursday, saying that UK services inflation and wage growth remained too high to justify an interest rate cut.

GBP/USD Reaction to the UK Retail Sales Numbers

Before the UK retail sales figures, the GBP/USD rose to a high of $1.24392 before falling to a low of $1.23883.

However, in response to the retail sales report, the GBP/USD fell to a low of $1.24033 before rising to a high of $1.24210.

On Friday, the GBP/USD was down 0.14% to $1.24192.

Up Next: FOMC Member Speeches

On Friday, FOMC member speeches will draw investor interest amid falling bets on multiple 2024 Fed rate cuts. FOMC member Austan Goolsbee is on the calendar to speak. Views on inflation, the US economy, and the timeline for an interest rate cut need consideration.

Investors must also continue monitoring news updates from the Middle East.