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UK: Surge in sales ignored as GBP remains southwards bound - MUFG

FXStreet (Delhi) – Derek Halpenny, Research Analyst at MUFG, notes that the UK pound remains under downward pressure with expectations of the first rate increase out around September 2016 even as the strength of the CBI retail sales clearly reflects the fact that nominal wages are continuing to accelerate in circumstances of low inflation which is fuelling real income gains that in turn is driving real consumer spending.

Key Quotes

“The UK CBI Retail Sales report is perhaps not often worthy of comment but some of the details from yesterday’s release are certainly worth a mention. The volume of reported retail sales surged to 49 in September – levels over 45 are pretty rare – there have only been five episodes since the financial crisis and three of those in the last year – clearly consumer spending is robust.”

“Furthermore, expected sales volume in October jumped to 51, a bit below the record high of 58 set in June but still the second strongest level of expected sales since 1996. Finally, expected orders to be placed surged to 44 in October, which was the highest reading since August 1987.”

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