Pound Surges On Strong Retail Sales Data Set

By David Schutz,

THE TAKEAWAY: UK retail sales improve on expectations -> Economic outlook improving but still delicate -> Strong data set bolsters Sterling

UK retail sales rose at the fastest pace in over a year as warm March weather boosted clothing and gardening equipment sales, the UK stats bureau reported today. March sales rose 1.5% on the month versus the expected 0.4% increase, and when compared to March 2011, sales increased 2.8% against the expected 1.3%. Panic caused by rising fuel prices also contributed to the strong showing.

The data added to optimism that the UK economy returned to growthin 2012’s first quarter. UK unemployment dropped for the first time inalmost a year to 8.3% on the month, the stats bureau said earlierthis week. However, with wages c ontinuing to fall inreal terms and firms remainingreluctant to hire , the foundations for asustainable long-term recovery in retail spending remainshaky.

Meanwhile, the Bank of England continues to juggle growth stimulus against the rising threat of inflation. Thisweek’s hawkish BOE minutes highlighted the inflationissue, and BOE member T ucker recently said CPI may not fall as fast as hoped, anddescribed recent news on inflation as “bad.” The Minutes also said that although globaleconomic recovery is proceeding broadly as expected, concerns outof the Eurozone are now greater if anything.

Today’s retail sales data bolstered the pound against the US Dollar. Cable strengthened to a session high by 1.6116, and Sterling also gained against the Euro and Japanese Yen intraday.
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Original Article: http://www.dailyfx.com/forex/market_alert/2012/04/20/Pound_Surges_on_Strong_Retail_Sales_Data_Set.html

DailyFX is the forex news and research arm of FXCM (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

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