Today’s economic updates reveal challenging conditions for the UK economy, as retail sales and currency movements highlight the impact of ongoing uncertainties. Here’s a closer look at the latest developments.
UK Retail Sales: A Decline in Consumer Spending
This morning’s release of the UK’s Retail Sales data showed a month-on-month decline of 0.3%, a stark drop from the 0.5% growth recorded last month. The slowdown reflects mounting pressure on the retail sector, with consumer spending hampered by economic uncertainties.
Pound Weakens After Interest Rate Decision
The pound has faced significant pressure following yesterday’s Bank of England interest rate decision. The main driver behind its decline was the unexpected split in the Monetary Policy Committee (MPC), where three members voted to cut rates.
This divergence has amplified concerns about the UK’s economic outlook and added volatility to the currency markets:
- Against the dollar, the pound has fallen over 100 points, with the dollar’s strength underpinned by robust US economic performance.
- Against the euro, sterling has shown relative resilience, as ongoing Eurozone struggles weigh on the euro.
Uncertainty Over 2025 Monetary Policy
The Bank of England’s indication of four rate cuts in 2025 has been met with scepticism. Labour’s recent budget, expected to fuel higher inflation, casts doubt on the feasibility of such projections. This uncertainty has left markets in a state of flux, awaiting clearer signals on future monetary policy.
US Data in Focus
Later today, the US will release its Personal Income data, with core price growth forecasted at 0.2%, slightly down from last month’s 0.3%. This release could shape market sentiment and influence further currency movements, particularly for the dollar.
How Could This Impact Your Business?
The combination of weaker UK retail sales, volatile exchange rates, and shifting monetary policies highlights the importance of staying agile in uncertain markets. For businesses with international exposure, understanding these dynamics is critical to managing risks and capitalising on opportunities.
Speak to Qumoney’s experts today for bespoke strategies to navigate currency fluctuations and protect your bottom line.