Retail Sales Rise

The latest release from the UK Office for National Statistics today showed that retail sales grew for their sixth consecutive month in October. Retail sales rose 1.2% from the prior month, firmly beating expectations for a -0.3% reading. While the results were also 5.8% higher than the same month last year, they were a little lower than the prior month’s 1.4% reading.

The breakdown of the data suggests that UK consumers have begun their Christmas shopping early this year in light of the lockdown restrictions which were initiated at the start of the month. Online sales jumped by 52.8%, continuing the recent trend in digital shopping, while in-store sales were down 3.3%.

Digging down into the sales over the month clothing sales were down 14% over the month. Despite a 17.1% rise in online sales, in-store sales dropped by 22.1%. Meanwhile, food sales marked a rise of 3.4% over the month, bolstered by a rise in online shopping.

Commenting on the results, Jonathan Athow, the deputy national statistician for the ONS said: "Despite the introduction of some local lockdowns in October, retail sales continued its recent run of strong growth.”

Athow went on to say: "Feedback from shops suggested some consumers may have brought forward their Christmas shopping, ahead of potential further restrictions. Online stores also saw strong sales, boosted by widespread offers. However, the slow recovery in clothing sales has stalled after five consecutive months of increased sales."

Inflation Rises But Downside Risks Remain

The retail sales data comes hot on the heels of the latest inflation data which showed that CPI prices rose 0.7% last month, above the expected 0.5% while core inflation rose to 1.5%. However, despite the increases seen last month, inflation is likely to have dipped over November given the new nationwide lockdown which was put in place. The lockdown is due to be reviewed on December 2nd, with broad expectations that many restrictions will remain in place in the run up to the UK Christmas holidays at the end of the year.

Technical Views

GBPUSD

GBP continues its attempts to break out against the US dollar. Price has now broken back above the 1.3191 level. Above here the next resistance will be at the retest of the underside of the broken bullish channel, ahead of the 1.3516 structural resistance.

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