Market Brief: UK retail sales fall for the first time since 2013
20 Nov 2017
Yesterday morning UK retail sales were released which showed that volumes as measured by the ONS grew by 0.3% in October following a downwardly revised 0.7% contraction in September.
Today's data releases |
Key levels | |||
---|---|---|---|---|
08:30 | EU ECB's Draghi speaks in Frankfurt | Support | Resistance | |
10:00 | EU construction output |
GBP/USD | 1.3030 | 1.3340 |
13:00 | US Bundesbank Weidmann speaks | GBP/EUR | 1.1070 | 1.1375 |
13:30 | US housing starts |
Market overview
Yesterday morning UK retail sales were released which showed that volumes as measured by the ONS grew by 0.3% in October following a downwardly revised 0.7% contraction in September. This corresponded to a year-on-year drop of 0.3% (the first in four-and-a-half-years). Higher inflation had dampened spending, the ONS said, but it also said October last year had seen very strong growth. Economists also pointed to unusually warm weather holding back sales of winter clothing. Although the figures were relatively uninspiring, sterling managed to perform well against its peers closing above 1.1200 and 1.3200 against the Euro and Dollar respectively.
The Bank of England will probably need to raise interest rates a couple more times over the next few years if Britain’s economy develops as expected, Governor Mark Carney was quoted as saying on Thursday, echoing guidance the Bank has given previously. “We’ll see how the economy evolves. If it evolves broadly in line with our projections, we would probably raise interest rates a couple of times over the next few years,” Carney told the Liverpool Echo newspaper. Carney also told the newspaper that Brexit could affect the path of Britain’s economy but the “fundamental economic impact of leaving the European Union will only be known over a very long period of time.”
Eurozone inflation slowed slightly as initially estimated in October, final data from Eurostat showed Thursday. Inflation eased to 1.4% in October from 1.5% in September. The rate came in line with the flash estimate released on October 31. On a monthly basis, the HICP gained 0.1% in October. Although inflation was softer than expected, the European Central Bank is more confident that inflation will gradually reach its target of "below, but close to 2 percent". ECB member Praet said ‘The recalibration of our asset purchases reflects growing confidence in the gradual convergence of inflation rates towards our inflation aim’. Praet also said that the strength and resilience of the euro area recovery boosts the ECB's confidence that reflationary forces will gradually support a return of headline inflation towards its target.
Across the pond the House Republicans passed their version of the US tax reform/tax cuts legislation, with 227 votes in favour and 205 against. Whilst this is an important hurdle, the proposals still have a way to go before they find themselves enshrined in law. Indeed, there are two separate versions of the tax legislation, one with the House and one with the Senate. The Senate bill was also discussed yesterday amongst key Senate Republicans but has not yet found its way onto the Senate floor, with Senate Majority Leader Mitch McConnell saying he will bring it for debate after Thanksgiving next week. Passage through the Senate is likely to be more challenging than last night’s House vote, with a couple of Republicans already voicing opposition to the proposals. Assuming the Senate vote does then pass, the legislation would then need to go to conference to try and reduce differences between the House and Senate versions, which could also be challenging.
The Bank of England will probably need to raise interest rates a couple more times over the next few years if Britain’s economy develops as expected, Governor Mark Carney was quoted as saying on Thursday, echoing guidance the Bank has given previously. “We’ll see how the economy evolves. If it evolves broadly in line with our projections, we would probably raise interest rates a couple of times over the next few years,” Carney told the Liverpool Echo newspaper. Carney also told the newspaper that Brexit could affect the path of Britain’s economy but the “fundamental economic impact of leaving the European Union will only be known over a very long period of time.”
Eurozone inflation slowed slightly as initially estimated in October, final data from Eurostat showed Thursday. Inflation eased to 1.4% in October from 1.5% in September. The rate came in line with the flash estimate released on October 31. On a monthly basis, the HICP gained 0.1% in October. Although inflation was softer than expected, the European Central Bank is more confident that inflation will gradually reach its target of "below, but close to 2 percent". ECB member Praet said ‘The recalibration of our asset purchases reflects growing confidence in the gradual convergence of inflation rates towards our inflation aim’. Praet also said that the strength and resilience of the euro area recovery boosts the ECB's confidence that reflationary forces will gradually support a return of headline inflation towards its target.
Across the pond the House Republicans passed their version of the US tax reform/tax cuts legislation, with 227 votes in favour and 205 against. Whilst this is an important hurdle, the proposals still have a way to go before they find themselves enshrined in law. Indeed, there are two separate versions of the tax legislation, one with the House and one with the Senate. The Senate bill was also discussed yesterday amongst key Senate Republicans but has not yet found its way onto the Senate floor, with Senate Majority Leader Mitch McConnell saying he will bring it for debate after Thanksgiving next week. Passage through the Senate is likely to be more challenging than last night’s House vote, with a couple of Republicans already voicing opposition to the proposals. Assuming the Senate vote does then pass, the legislation would then need to go to conference to try and reduce differences between the House and Senate versions, which could also be challenging.