The Pound Sterling weakened against the Euro, US Dollar and most major currencies after weak UK retail survey data added to concerns that rising energy costs are starting to hit consumer spending.
Pound to Euro (GBP/EUR): 1.15248 (-0.21%)
Pound to Dollar (GBP/USD): 1.35359 (-0.49%)
Euro to Dollar (EUR/USD): 1.17451 (-0.28%)
Fresh figures from the British Retail Consortium showed like-for-like sales fell 3.4% year-on-year in April, sharply down from March’s 3.1% increase and well below expectations.
Pantheon Macroeconomics said the headline figures were exaggerated by Easter timing effects, with Easter falling in April last year but in March this year.
“Early Easter exaggerates the fall, but it was a weak reading nonetheless,” Pantheon said.
After adjusting for Easter distortions, Pantheon estimates underlying retail sales growth was closer to -0.2% year-on-year, still marking the weakest performance since mid-2024.
The consultancy said both the BRC and recent CBI retail surveys now point to softer consumer spending as higher oil and fuel costs begin to weigh on households following the Iran conflict.
Pantheon estimates the BRC survey alone is consistent with official retail sales volumes falling around 1.0% month-on-month in April, although broader models suggest the eventual decline may prove smaller.
“We probably have the first signs of a hit from the Iran war,” Pantheon said, though it cautioned that one month of data is not enough to draw firm conclusions.
Investors are increasingly watching UK consumer activity closely after stronger spending helped support first-quarter growth earlier this year.
Official retail sales volumes had previously risen at the fastest three-month pace in almost a year during March, raising expectations that consumers were initially absorbing higher energy costs relatively well.
However, weaker April survey data may reinforce concerns that higher inflation and expectations for further Bank of England tightening are beginning to erode demand.
Pound Sterling has remained relatively firm in recent weeks due to higher UK rate expectations, but softer consumer data could begin limiting further gains if growth concerns intensify.
Read full data release: RC Retail Sales Monitor
