U.K. retail sales rebound in February, consumer sector outlook appears relatively constructive

U.K. retail sales rebounded in the month of February after two straight months of decline. Retail sales rose 0.8 percent sequentially, stronger than consensus expectations of a rise of 0.4 percent. Ahead of today’s release, surveys of retail activity from both the BRC and CBI had indicated towards the possibility that retail sales volumes would rise in February. But, as the survey period for the report today ran only until 24 February, any downward effect from lowered footfall at the end of the month and into early March due to the snowfall is expected to be seen in the March figures, noted Lloyds Bank in a research report.

Furthermore, as the squeeze on the consumer is only just beginning to ease, the near-term picture for the consumer is expected to stay challenging. Notwithstanding the rise today the rolling three-month rise in retail sales volumes eased to 0.4 percent from January’s 0.8 percent.

The outlook for the consumer sector appears to be comparatively constructive, said Lloyds Bank. As seen by the February inflation release, headline CPI is past its peak and is likely to continue to drift lower in the year ahead, stated Lloyds Bank. Meanwhile, the tightness of the U.K. labor market should lead to some further acceleration in wage inflation in the months ahead. These influences are likely to ease some of the pressure on household’s balance sheets and give a supportive backdrop for consumer spending, added Lloyds Bank.

At 16:00 GMT the FxWirePro's Hourly Strength Index of British Pound was slightly bullish at 56.1622, while the FxWirePro's Hourly Strength Index of US Dollar was slightly bearish at -53.4329. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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