– U.K. Retail Sales to Contract for First Time Since December.
– Will Slower Consumption Encourage the BoE to Further Delay Normalizing Monetary Policy?
Trading the News: U.K. Retail Sales
The U.K. Retail Sales report may produce headwinds for the British Pound and drag on GBP/USD as signs of a slowing recovery provides the Bank of England (BoE) with greater scope to further delay its normalization cycle.
What’s Expected:
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Why Is This Event Important:
Even though BoE argues that the next policy move will be to lift the benchmark interest rate off of the record-low, the Monetary Policy Committee (MPC) may preserve its current policy throughout 2016 in an effort to mitigate the downside risks surrounding the real economy.
Expectations: Bearish Argument/Scenario
Release
Expected
Actual
CBI Trends Total Orders (MAR)
-14
-14
NIESR GDP Estimate (FEB)
—
0.3%
GfK Consumer Confidence (FEB)
3
0
The recent weakness in household sentiment accompanied by the slowdown in economic activity may drag on private-sector consumption, and a dismal sales report may spur a bearish reaction in GBP/USD as market participants push out bets for a BoE rate-hike.
Risk: Bullish Argument/Scenario
Release
Expected
Actual
Jobless Claims Change (FEB)
-9.1K
-18.0K
Average Hourly Earnings ex. Bonus (3MoY) (JAN)
2.1%
2.2%
Net Consumer Credit (JAN)
1.4B
1.6B
Nevertheless, the expansion in private-sector lending paired with the ongoing improvement in labor-market dynamics may boost household spending, and a positive development may generate a near-term rebound in GBP/USD as it puts pressure on Governor Mark Carney and Co. to normalize monetary policy sooner rather than later.
