UK sterling weakens against majors after British retail figures disappoint

UK sterling is back on a slide against major world currencies after this week’s retail sales volumes including fuel sank 1.3 percent, confounding economists forecasts for flat sales in the British economy.

Latest UK Sterling Rates

As of 08:10 GMT today, one pound UK sterling bought 1.16670 euro (0.12 percent lower) and against the US dollar the rate was $1.50950 (0.08 percent lower) and is heading close to its lowest level since early April.

Blame the Weather

The Office for National Statistics, which published the figures, said retailers had indicated that poor weather hindered their spring and summer ranges, with sales of barbecue food and garden furniture taking a hit.

Consumer spending, which accounts for 60pc of Britain’s gross domestic product, has been pressured in recent years by below-inflation wage growth, worries about the economy and government austerity measures.

“Much of the latest news on the UK economy has been relatively encouraging; but even allowing for the negative impact of ongoing cold weather and the fact that Easter occurred in March this year, April’s marked drop in retail sales provides a reminder that the economy is not yet out of the woods and still has a challenging job to develop sustained, clear growth.” said Howard Archer, chief economist at IHS Global Insight.

UK retail sales including fuel declined 1.3 percent from March, when they fell 0.6 percent according to the UK’s Office for National Statistics. The median forecast of 25 economists in a Bloomberg News survey was for a 0.1 percent increase. Food sales plunged 4.1 percent, the most since May 2011.

The ONS added that “there was little evidence of the bad weather having a significant effect on the services industry” during the first quarter. Added to the mix, strong oil and gas production from the North Sea also helped the economy to avoid a potential triple-dip recession.

The data was published one day after the International Monetary Fund (IMF) declared that Britain was “a long way” from a sustainable economic recovery. In a gloomy report, the IMF also called for the government to boost infrastructure spending in order to accelerate economic growth and offset state austerity.

The IMF repeated its call for British finance minister George Osborne to ease the coalition government’s austerity drive, despite his insistence last week that he would stick by his deficit slashing measures.

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UK sterling weakens against majors after British retail figures disappoint