Cable surged following the UK retail sales report for April, which beat the median forecasts. Warm weather boosted seasonal clothing and footwear sales that saw the biggest gain in this category since April 2011. The data will help cement expectations for return-to-form GDP growth in Q2 after a dip in Q1. Cable has logged a 1.5690 high, which has taken the pound back above its 200-day moving average, which is presently sitting at 1.5596.
UK April retail sales much better than expected, rising 1.2% month over month, up on the median forecast for 0.2% growth. The year over year figure was up 4.9%, beating the expected 3.5% growth. Warm weather boosted seasonal clothing and footwear sales, which rose 5.2%, the biggest gain in this category since April 2011. There are fundamental underpinnings to retail sales, too, with unemployment is at seven year lows of 5.5% and real average household incomes trending higher. Unsecured consumer credit has been increasing amid this backdrop.
UK CBI industrial trends on the other hand disappointed at the total orders level, which fell to a seven-month -5 reading in May from +1. Export orders came in at -7, the best level since last August and improving from -11 in the previous month, extending the recovery from the sharp decline to -26 in March. Improvement in the Eurozone economy appears to be offsetting the high value of the pound. Expectations remained relatively upbeat, at +15 in the prospects for the balance of output volumes in the three months ahead, down fractionally from April’s +16 reading. Domestic demand should remain robust on trending improvement in the labor market, while improving conditions in the Eurozone, particularly, and the U.S. should support exports despite the high value of the pound.