Pound Sterling Stays Firm Despite Sharp Drop in UK May Retail Sales

Pound Sterling Trades Firm Despite Steep UK Retail Sales Decline in May

The Pound Sterling (GBP) held firm on Friday, shrugging off a significant fall in UK Retail Sales, which plunged by 2.7% month-on-month — the sharpest decline since December 2023. The data from the Office for National Statistics (ONS) showed a much larger drop than economists’ forecast of a modest 0.5% decline, signaling weak consumer spending momentum.

Retail Sales Fall Highlights Consumer Weakness

Year-over-year retail sales also fell unexpectedly by 1.3%, against expectations of a 1.7% increase. Department stores and Textile, Clothing & Footwear outlets contributed heavily to the downturn, marking a broad-based slowdown in consumer demand.

BoE Holds Rates, Markets Eye Rate Cuts

Despite the soft retail data, the Bank of England (BoE) left interest rates unchanged at 4.25% in its latest policy meeting. However, the data has strengthened market expectations for two rate cuts before year-end, as weak consumer spending may pressure the central bank to ease monetary policy.

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