The Pound Sterling was steady on Monday after UK retail sales data showed spending growth cooled in June, although underlying consumer demand remained resilient despite higher energy prices and political uncertainty.
The Pound to Dollar exchange rate (GBP/USD) traded around 1.3390, while the Pound to Euro exchange rate (GBP/EUR) remained close to 1.1720, near its strongest level of the year.
According to Pantheon Macroeconomics, June’s record-breaking temperatures helped support retail spending, with consumers snapping up fans, paddling pools and other summer goods.
“The warmest June on record for England… boosted retail sales in June.”
Like-for-like sales growth slowed to 1.7% year-on-year from 3.4% in May, while total sales rose 1.9%, but Pantheon believes temporary factors distorted the monthly figures.
“The underlying trend in retail spending has been made tricky by the distortions from the early Easter and now soaring temperatures.”
The consultancy estimates that, after adjusting for seasonal effects and inflation, retail spending has slowed only modestly since the start of the Middle East conflict.
“The war in Iran seems to have had only a modest effect.”
Pantheon expects official retail sales to show some payback after May’s exceptionally strong performance, forecasting a 0.3% month-on-month decline in June retail volumes.
However, it argues that the broader picture remains encouraging, with consumer spending continuing to grind higher despite pressure on household incomes.
