The volume of retail sales in the UK dropped sharply in April, by 2.3%, much worse than a drop of 0.8% that was expected.
GBP/USD, which already dropped beforehand below 1.5720, dipped below 1.57 and reached 1.5675. The move is still going on.
The disappointment was only marginally balanced by an upwards revision in last month’s nice rise: 2% instead of 1.8% originally published.
The meeting minutes from the recent MPC meeting aren’t helpful to the pound either. Yet again, one member voted for more QE.: David Miles, like last month. He wanted it to rise from 325 to 350 billion pounds. The long running dove, Adam Posen, is leaving the BOE, but with the current situation, the dovish stance will likely be more present.
Inflation figures published yesterday showed that the annual pace of inflation finally returned to its 1-3% target. The 3% CPI was a bit lower than 3.1% estimated by economists.
This follows the dovish words in the recent inflation report, that hinted for more QE.
For more, see the GBP/USD forecast.
Tomorrow, Britain will release the first revision of GDP growth for the Q1. The first release disappointed and officially put the UK in recession. The contraction of 0.2% will probably be confirmed.