GBP flows: GBP softer after weak retail sales
December retail sales data showed the largest one month fall since 2008 (excluding the pandemic). GBP is weaker, but only modestly, and further declines look justified
GBP has dropped back after the much weaker than expected December retail sales number, although the immediate response has been quite modest given the sharpness of the decline. Excluding the pandemic, the 3.3% December decline is the largest since June 2008. Nevertheless, it needs to be seen in context, as these numbers can be very choppy, it follows a strong November, it was likely affected by seasonal factors, and the 3 month annualised growth rate is little changed near -3.5% - although this is of course still very weak. But even in context, it should be sufficient to justify a EUR/GBP rise back to 0.86, given the decline seen this week.
