Mixed UK retail sales numbers for January.. |
It has not been the best week for Sterling sellers, having lost an easy 1% after the surprising inflation data. Retail sales numbers released today haven't exactly helped, but it could have been a lot of worse. Volumes increased by 0.5% last month, beating expectations of 0% and December's figure of -1.2%. Year-on-Year sales were also slightly better than forecast (-5.1% v -5.5%), however sales volumes fell by 0.9% in the last 3-months compared to the previous quarter. It puts the economic picture at a 'little less grim' than first believed as consumers are still spending. However, it's likely retail sales have yet to hit a floor. This is because of the ongoing energy and cost of living grants still in place, as well as many re-mortgages not yet being realised. Q2 is expecting to be difficult for consumers, which is where we will see the bottom-out point. Bank of America have today released their new forecast for 2023 which shows they remain bearish on Sterling. They believe GBP is "less bad" than originally believed, but feel this year will be almost impossible for any substantial and consistent upside. They have gone against the grain somewhat in suggesting the second half of the year will be tougher than the first versus the Euro and see £-€1.12 near-term v £-€1.10 long-term. GBP v USD is seen to struggle throughout the year in their opinion at £-$1.18 v £-$1.21. |