Drop in UK retail sales sparks fears of a major economic impact

Fears of a major economic impact of the fast-spreading pandemic resurfaced after the Office for National Statistics highlighted the largest decline in British retail sales. As a result, the GBP/USD is being traded around the 1.23 region.

The impact of the pandemic on retail stores continued to escalate following the release of the March figures, which showed a record fall in the number of sales in the UK. Sales of clothing declined by 35%, compared to the previous month, whereas petrol sales dropped by 18.9%. The ONS showed how sales for food increased by value by 15.3%, household goods by 18% and non-food items by 16.4%. 

ING’s currency strategist Francesco Pesole said, “Sterling-dollar can still go lower. COVID-19 as a crisis has proved to be longer than expected, and investors are looking for some indication of what the UK government’s exit plan will look like.”

Additionally, Chief EU Brexit Negotiator Michel Barnier reported that there has been no development in the talks with the European Union.

Furthermore, the EUR/USD trades around 1.08, with the American dollar expected to see its biggest weekly increase since April. 

Brown Brothers Harriman’s Ilan Solot spoke about the EU meeting which failed to decide on a broad package, saying “They just delivered on the basics and fell short of surprising markets positively and that is weighing on the euro.”

The Australian dollar and the kiwi declined by 0.2%. 

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