The volume of retail sales in the UK rose by 0.6% in September, exceeding expectations for a rise of 0.4%. In addition, this rise came on top of an upwards revision to August’s figure: -0.1% from -0.2% originally reported.
GBP/USD stopped its gradual drop that was seen beforehand, and is now at 1.6150, in the very middle of the range.
The better than expected consumer activity coincides with yet another drop in jobless claims for September and a drop in the unemployment rate for August reported yesterday.
All the signs provide hope that the UK is indeed exiting the recession. Economic contraction peaked in Q2 and there’s hope that a return to growth in Q3 will be reported next week.
It’s important to note that a decision on more QE from the BOE also depends on the government’s moves, as Michael Derks details here.
GBP/USD also enjoys the improved mood in Europe, which could be seen in a successful bond auction for Spain.