Inconvenient snowfall and general bad weather may have prevented UK consumers from spending in January, but they flashed the cash in February – allowing UK retail sales to rise by significantly more than expected.
The Pound Sterling Exchange Rate was in the region of 1.5169 against the US Dollar as of 10:33 am
In spite of accelerating inflation, ever increasing energy bills and poor wage growth, UK consumer spending increased by 5.2 per cent on items like computers in February, also jumping by 1.5 per cent on clothing and 0.8 per cent on fuel.
Although economists envisaged a gain of 0.4/0.5 per cent, retail sales including fuel actually increased by 2.1 per cent from the previous month, the most significant advance for almost a year.
From the same period of 2012 retail sales were up by 2.6 per cent.
After the report was released the Pound continued to move higher against the US Dollar, extending earlier gains until it reached 1.5187 US Dollars. It continues to trade in the region of 1.517 US Dollars.
Meanwhile, Sterling also climbed against the Euro as the common currency broadly softened following the publication of worse-than-expected manufacturing figures for Germany and the Eurozone.
Before the retail sales report was released currency strategist Lee Hardman commented: ‘We are seeing a modest pick-up in safe-haven demand for the Pound given the renewed uncertainty in Europe. The minutes were less dovish than expected, which suggests that further quantitative easing is not imminent.’
Yesterday the Pound gained on the majority of its currency rivals after minutes from the latest Bank of England Policy meeting showed that two thirds of the Monetary Policy Committee had voted against additional stimulus, commenting that upping bond purchases could trigger an ‘unwarranted depreciation of Sterling.’
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