By Claire West
Sterling nosedived to a six and a half month low against the euro and fell against the dollar this morning after soft retail sales data highlighted the weakening pace of economic growth in the UK.
Retail sales fell for a second consecutive month in September as the Office for National Statistics said sales volumes, including automotive fuel, fell 0.2 percent last month. Analysts had forecast a rise of 0.4 percent last month. On the year, sales were 0.5 percent higher, well below forecasts for a reading of 1.0 percent annual growth.
The pound fell around 1 per cent against the euro to hit 89.05 pence, and fell against the dollar around 30 pips to $1.5790 after the data was released.
Mark Bolsom, Head of the UK Trading Desk at Travelex Global Business Payments comments, “More doom and gloom following the Coalition’s Spending Review yesterday. It is unsurprising that consumers are tightening their belts after the stream of negative headlines we have seen over the past few months. They are concerned about what is coming and are scaling back spending accordingly.
Bolsom adds, “I think the economic recovery has peaked. UK economic data is soft and today’s retail sales data will just add to that view. The pace of economic growth is slowing and all eyes will be on the Bank of England to see when and if they decide to initiate a second burst of quantitative easing.”