Sterling broadly stable overnight following yesterday’s sell off in the wake of the inflation data release. Market still seemingly confident that Bank of England will hike rates to 0.75% in May but yesterday’s Sterling price action suggests perhaps less confident about a second hike in H2 2018 given modest wage-led inflationary pressures.
Markets may well react to today’s March retail sales data release (09.30) but note that retail sales growth has historically been volatile from month to month. Non-official indicators cloud the picture, as does the fact that weather was particularly cold/wet in March. In any case from the Bank of England’s perspective retail sales data may not matter as much as markets or analysts think they do because ultimately retail sales are a narrow measure of broader household consumption. And the broader picture is not particularly encouraging.
