January 20, 2023 07:09 GMT
Retail sales disappoint - GBPUSD marginally lower
- Weak retail sales print in December with even food volumes down with some retailers saying people stocked up early for Christmas. Non-food stores sales volumes were 2.1%M/M lower while overall sales volumes were 1.7% below the pre-Covid levels.
- The ONS says that the 3.0% fall for 2022 vs 2021 (whole year) is due to "lifting of restrictions on hospitality led to a return to eating out, and rising prices and the cost of living affected sales volumes."
- This combined with a further fall in the GfK consumer confidence indicator overnight (back below Dec and Nov levels see more on that here) will be a concern for the MPC - but it was always expected the economy would slow and in our view this is probably less important than the rise in core CPI seen earlier this week.
- GBPUSD kneejerk move was around 15 pips lower (some of which has come back), but this may be weak enough to see SONIA outperform a little on the STIR open which may feed through to a bit more GBP FX weakness in the next half hour.