Sterling Holds Steady After Stronger-Than-Expected UK Retail Sales in April

UK Retail Sales Surpass Expectations, Sterling Holds Firm Despite Inflation Concerns

Sterling showed resilience after the release of stronger-than-anticipated UK retail sales data for April, gaining modestly despite ongoing concerns over inflation and potential interest rate policy changes.

According to the latest official figures, UK retail sales rose by 1.2% month-on-month in April, significantly outperforming economists’ consensus forecasts of a 0.3% increase. This marked a robust rebound following a downward revision of March’s growth to 0.1%. The unusually favorable weather during April is believed to have contributed positively to consumer spending, boosting retail activity across the country.

However, despite the encouraging sales numbers, inflation pressures in the UK remain elevated. April’s inflation figures came in higher than expected, creating uncertainty around the Bank of England’s (BoE) future monetary policy moves. Analysts, including Phil Monkhouse of Ebury, suggest that the BoE may need to delay any further interest rate cuts for several months to address persistent inflation risks, dampening some of the optimism from the sales data.

As a result, the British pound (GBP) remained relatively stable, trading around $1.3453—up 0.3%—and close to levels before the retail data release. Meanwhile, the euro also saw a slight gain of 0.1%, reaching 0.8414 pounds, maintaining its pre-release position.

Overall, while the stronger retail sales signal underlying consumer strength, inflation concerns are likely to temper expectations of imminent monetary easing by the Bank of England in the near term.