The United Kingdom (UK) experienced a positive turnaround in retail sales in May, with a significant rebound of 2.9% compared to the previous month of April, where sales had fallen by 1.8%. This data was revealed in a report by the Office for National Statistics (ONS) that was published last Friday. The market had initially predicted a more modest increase of 1.5% for the reported month, making the actual figures a big beat in comparison.
Especially noteworthy was the Core Retail Sales, which excludes auto motor fuel sales, showing a substantial jump of 2.9% month-on-month. This was a significant improvement from the previous decline of 1.4% and well above the market forecast of 1.3%. The positive trend in retail sales was further reflected in the annual figures, with a 1.3% increase in May compared to the previous month’s 2.3% drop. The Core Retail Sales also showed growth of 1.2% in the same month, a stark contrast from the previous -2.5%. These figures surpassed expectations and indicated a strong performance in the retail sector.
Following the release of the UK Retail Sales report, the market reacted positively with the GBP/USD currency pair gaining momentum and holding gains above 1.2650. Specifically, the GBP/USD saw a 0.10% increase on the day, trading near 1.2670. This uptick in the exchange rate was attributed to the upbeat UK data, which indicated a promising outlook for the economy. The strong performance in retail sales provided a boost for the British pound against the US dollar, reflecting investor confidence in the UK market.
Overall, the rebound in UK Retail Sales in May was a positive development for the economy, indicating a recovery from the previous month’s downturn. The Core Retail Sales figures, in particular, showed strong growth and exceeded market expectations, contributing to a favorable market reaction. The increase in retail sales bodes well for the UK economy, signaling increased consumer confidence and spending. As a result, the GBP/USD currency pair experienced gains following the release of the data, with the pound holding firm above key levels. This positive performance in retail sales could potentially lead to further upward momentum for the UK economy in the coming months.
