Retail Sales boosts Sterling
|Published: ||8 Feb at 10 AM|
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Sterling was steady against the dollar overnight with expectations of a UK rate hike may be needed soon to counter inflationary pressures offset by selling from Asian accounts.
Better than expected UK purchasing manager surveys in January helped to counter negative sentiment surrounding a surprise contraction in growth in the last quarter of last year.
Investors are now pricing in a rate hike as soon as May of this year to tackle stubborn inflation. Little chance of a move is expected this week when the Bank of England Policy Committee meets on Thursday but focus will then fall squarely on next week’s quarterly inflation report for any clues on when, not if the BoE will move.
House prices in England and Wales fell in January, although the pace of decline eased for a third consecutive month. The Royal Institution of Chartered Surveyors seasonally adjusted house price index rose to -31 from -39 in December, its highest level since July and far better than the consensus forecast of -38.
British Retails Sales saw a significant bounce back in January after the snow-hit December’s figures were far from supportive of the pound. The positive figure was driven by the discounts and a rush to beat the VAT sales tax rise after the New Year.
The BRC (British Retail Consortium) said that like for like sales in retail we 2.3% higher in January that a year ago, the strongest annual rate of growth since March.
These figures should lend support to UK Economic Growth, with the 0.5% contraction now thought to be a blip rather than a long term problem.
With the Bank of England dominating proceedings this week, we will have more on any rumours that come thorough as we get them.