On Friday, we learned that UK retail sales in December were even worse than expected, particularly if you take fuel out of the equation. Last month, they dropped to -0.9% against an expectation of -0.8%, but excluding fuel, the figure was much worse at -1.3% when the markets had been expecting -0.6%. On an annual basis, the figures were also disappointing, coming in at 3% in December from 3.4% the previous month and some way below the 3.6% predicted. But again, excluding fuel, the figure in 2.6% against an expectation of 3.9%.
Sterling dropped back against the dollar on Friday to hover around the $1.29 mark. However, it is fair to say that the week’s moves were fairly encouraging, as they could have been a lot worse. Having said this, the muted moves are almost certainly because the City is waiting to see what happens next in the Brexit negotiations. We can expect more significant moves when the picture becomes clearer, though in which direction depends on the type of Brexit we can expect.
It is a quiet start to the week, at least as far as UK economic data is concerned, but tomorrow it picks up a little beginning with the public sector net borrowing figures for December. We will also see the unemployment change for November and average earnings figures. With inflation dipping recently, it will be interesting to see if we are all that bit better off.
