UK Retail Sales Rise

It has been announced that UK Retail Sales figures have increased by 0.2% in June as there are further signs of the UK economy recovering albeit slowly. While this increase is positive for the UK economy it is a lot lower than last month’s figure where we saw an increase of 2.1% however the fact we have positive momentum for retail sales, a large area of the UK economy is good news and could help give Sterling exchange rates a boost. Recently new governor of the Bank of England, Mark Carney, stated that interest rates will remain low for some time in an effort to encourage more spending and it appears that sales are still strong. Good retail figures are important for the UK as it is a large sector of the overall economy and it also means that there is more money moving through the economy.

As we saw earlier in the week inflation is still rising rapidly which means that there is likely to be more pressure on retail sales as prices rise and currently wage increases are not rising in line with inflation so theoretically there is a chance future retail sales will begin to fall. However, it does appear that retailers are trying to combat this with heavy promotions and sales being accounted for the recent surge in sales. The question is; can retailers continue to offer big sales and discounts to encourage more spending? I believe that the recent spate of good weather will help retail sales continue to improve and with the recent positive data we could see Sterling start to recover against a number of the major currencies however as mentioned yesterday I would be surprised to see any gains for the Pound contained until Carney and the rest of the Bank of England decide that we are moving in the right directon and therefore can start to increase interest rates and taper down our Quantitative Easing which may take some time.

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