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U.K. retail sales fall in March, consumer sector outlook likely to remain constructive

U.K. underlying retail sales dropped in March. Sales, excluding auto fuel fell 0.5 percent to deliver a bigger fall than markets expected but it was closer to the consensus expectations of a fall of 0.4 percent. The prospect of a decline in Marc retail sales had been anticipated, not least because of the wintry weather conditions that hit the nation in March, which lowered retail store footfall, but also coming after a comparatively buoyant rise in February.

The effect of the poor weather was clear in sales at clothing and footwear stores and fuel sales, with the latter pushing headline retail sales down by 1.2 percent on the month. As a result of the fall in March, retail sales saw a drop of 0.5 percent in the first quarter – its first decline since the first quarter of 2017.

The outlook for the consumer sector continue to be comparatively constructive. As seen by the inflation figures so far in 2018, headline CPI has eased away from its peak and is likely to continue drifting lower. Meanwhile, there is rising evidence that the tightness of the U.K. labor market is resulting in some acceleration in wage inflation, which is likely to continue in the months ahead, noted Lloyds Bank in a research report.

“These influences should ease some of the pressure on households’ balance sheets, providing a supportive backdrop for consumer spending”, added Lloyds Bank.

At 16:00 GMT the FxWirePro's Hourly Strength Index of British Pound was neutral at -42.0102, while the FxWirePro's Hourly Strength Index of US Dollar was highly bullish at 168.147. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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