UK retail sales fall 0.4% as rate-hike bets meet weaker spending
UK retail sales fell 0.4% month on month in September, after rising 0.7% in August, according to the Office for National Statistics; markets had expected a 0.1% decline. The data adds a weaker consumer-spending signal as investors weigh recent above-forecast inflation, which has strengthened expectations of a Bank of England rate rise in November.
Bottom line — September’s 0.4% sales decline sits alongside 3.5% annual inflation as markets assess the Bank of England’s next move.
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The ONS revised August’s retail-sales rise from 0.5% to 0.7%, FXStreet reported.
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UK consumer prices rose 3.5% year on year in September, up from 3.1% in August; core inflation reached 2.8%, according to the ONS figures cited by FXStreet.
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Markets were pricing a 98% probability of a 0.25 percentage-point Bank of England rate rise next month, FXStreet reported, citing LSEG data.
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Danske Bank added a November rate rise to its forecast, citing firmer inflation and more resilient activity, FXStreet reported.
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Exchange Rates said weaker retail sales and services activity could test Sterling, while French fiscal concerns had helped keep the pound above €1.19 against the euro.