Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

UK Retail Sales Set To Decline For The 3rd Month In A Row

By CMC Markets (Michael Hewson)Market OverviewMay 20, 2022 07:06
UK Retail Sales Set To Decline For The 3rd Month In A Row
By CMC Markets (Michael Hewson)   |  May 20, 2022 07:06
Saved. See Saved Items.
This article has already been saved in your Saved Items

At the end of another choppy week for European markets sentiment appears to have become much more fragile, with the moves being seen in bond yields reflecting concern that we are heading for a growth slowdown.

Yesterday’s price action saw a sea of red for markets in Europe with the most pain being felt by the retail sector after this week’s profit warnings from US retail giants Walmart (NYSE:WMT), Target (NYSE:TGT), and Kohls (NYSE:KSS).

US markets have also seen some heavy selling this week, with both the S&P 500 and Nasdaq 100 managing to hold above their lows from last week of 3,858 and 11,692, while still finishing the day lower for the second day in succession. Asia markets, on the other hand, have seen a strong rebound this morning after China cut its 5-year loan prime rate by 15 basis points, for the second time this year.

Consequently, European markets look set to open higher this morning at the end of yet another rollercoaster week for investors.

The one silver lining from the selling of the past two days was that we managed to close well off from last week’s lows, suggesting a general reluctance to become too bearish too quickly. That said every single rebound we’ve seen since early April has seen a rebound shallower than the previous one followed by a lower low.

One other thing that has also become clearer this week, has been a notable shift in tone in comments from Fed officials, and appears to indicate rising concern about stickiness in current levels of inflation. Powell’s comments on Wednesday do appear to be softening the market up for the prospect of more aggressive rate moves.

As we look ahead to today’s European open, we’ll be looking for a further insight into the damage that a record 9% UK CPI has done to the appetite for UK shoppers to go out and spend money, as the latest Gfk consumer confidence numbers for May fell to a record low of -40 in data released this morning, a truly sobering reflection of how much damage surging inflation is doing to consumer sentiment.

After a strong start to the year in January, UK retail sales have seen declines of -0.5% in February and -1.4% in March, battered by rising prices and consumer confidence back at levels last seen in 2008.

The march decline of -1.4% was driven by a sharp fall in fuel sales, as the rising cost of living prompted consumers to pare back non-essential spending and drive their cars less.

Not only that, but February was also revised lower, from -0.3% to -0.5%.

In cutting back on their spending, consumers will also have had one eye on the upcoming surge in energy bills, as well as other price rises, which were due to hit their wallets in April, and saw headline CPI rise to a record 9% in numbers released earlier this week.

The most recent BRC retail sales numbers showed that like-for-like sales fell 1.7% in April, so higher prices are certainly having an effect on spending patterns.

On the plus side, the Easter period may see a pickup in spending on travel and leisure as consumers take advantage of the later Easter break, although with the various travel problems, that may not offer the lift it might have done in the past.

Expectations are for a fall of -0.3% including fuel sales, however, it wouldn’t be a surprise to see a much bigger decline.

EUR/USD – appear to be building a base at the 1.0340 area, but we need to see a move through the 1.0650 area to make things interesting and signal a move towards 1.0820. The bias remains for a move lower towards parity, while below 1.0650.

GBP/USD – moved up to the 1.2520 area with an area of support at the 1.2320 area, as well as the recent lows at 1.2150. While below the 1.2630 level the risk remains for a move back towards 1.2000, on a break below 1.2150.

EUR/GBP – finding a bit of resistance just below the 0.8500 area, with stronger resistance at the 0.8520/30 area. Support remains down near the 0.8420 area.

USD/JPY – finding support just above the 126.80 area. This is a key support area, with a break below targeting 123.00. As long as 126.80 holds then a move towards the 135.00 area target remains intact.

Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

Original Post

UK Retail Sales Set To Decline For The 3rd Month In A Row

Related Articles

Ipek Ozkardeskaya
‘Very Challenging’, Indeed By Ipek Ozkardeskaya - Jun 23, 2022

Market optimism couldn’t survive Jerome Powell’s testimony yesterday, as he said that a recession is possible, and that calling a soft landing is ‘very challenging’ under the...

UK Retail Sales Set To Decline For The 3rd Month In A Row

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
som sithy
som sithy May 20, 2022 13:02
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Our Apps
© 2007-2022 Fusion Media Limited. All Rights Reserved.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
  • Sign up for FREE and get:
  • Real-Time Alerts
  • Advanced Portfolio Features
  • Personalized Charts
  • Fully-Synced App
Continue with Google
Sign up with Email