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UK DATA: Higher than expected retail sales in September but little monpol impact

UK DATA
Data BulletCEEMEABulletUKGlobalFixed Income BulletsForeign Exchange BulletsRegionMarkets
  • There was a big increase in sales from computer and telecommunications retailers which helped push the "other non-food stores" category 5.5%M/M higher which drove the surprise here. Looking at online sales from "other non-food stores" these rose 10.5%M/M. Anecdotally (but not stated in the release) there seemed to be a few iPhone sales ahead of the iPhone16 launch with discounts also seen across Samsung devices in response.
  • Supermarket sales fell 2.4M/M which the ONS notes is the "largest month-on-month fall for food stores this year. Comments from retailers pointed to unseasonably poor weather and consumers continuing to cut back on luxury food items."
  • Elsewhere department stores sales rose 1.9%M/M while fuel fell 0.1%M/M and the other three categories rose between 0.1-0.5%M/M.
  • Given the main driver of the surprise in today's data we don't think that this really constitutes any change in strength of the UK consumer and hence see little impact from the release for monetary policy.
  • GBPUSD has seen a relatively strong reaction to the data and is now around 30 pips higher than pre-7am levels, hitting an intraday high of 1.3059. We were already some way of yesterday's lows and we have now retraced around 85% of the losses since Wednesday's CPI print. The next level to the topside is 1.3077, Wednesday's high ahead of the 20-day EMA at 1.3124. Our technical analyst notes a clear breach of this average is required to signal a broader reversal higher.
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  • There was a big increase in sales from computer and telecommunications retailers which helped push the "other non-food stores" category 5.5%M/M higher which drove the surprise here. Looking at online sales from "other non-food stores" these rose 10.5%M/M. Anecdotally (but not stated in the release) there seemed to be a few iPhone sales ahead of the iPhone16 launch with discounts also seen across Samsung devices in response.
  • Supermarket sales fell 2.4M/M which the ONS notes is the "largest month-on-month fall for food stores this year. Comments from retailers pointed to unseasonably poor weather and consumers continuing to cut back on luxury food items."
  • Elsewhere department stores sales rose 1.9%M/M while fuel fell 0.1%M/M and the other three categories rose between 0.1-0.5%M/M.
  • Given the main driver of the surprise in today's data we don't think that this really constitutes any change in strength of the UK consumer and hence see little impact from the release for monetary policy.
  • GBPUSD has seen a relatively strong reaction to the data and is now around 30 pips higher than pre-7am levels, hitting an intraday high of 1.3059. We were already some way of yesterday's lows and we have now retraced around 85% of the losses since Wednesday's CPI print. The next level to the topside is 1.3077, Wednesday's high ahead of the 20-day EMA at 1.3124. Our technical analyst notes a clear breach of this average is required to signal a broader reversal higher.