The UK Retail Sales unexpectedly fell by 0.3% month-on-month in December, confounding market predictions of a 0.4% rise. The decline, announced by the Office for National Statistics (ONS), sent ripples through the currency markets, impacting key exchange rates. As the British Pound stumbled, the GBP/USD pair fell to near 1.2190 during Friday's European trading session, marking a 0.41% decrease on the day.
In contrast to the monthly setback, annual Retail Sales in the UK indicated a healthier trajectory, rising by 3.6% in December compared to a stagnant November. However, core Retail Sales, which exclude auto motor fuel sales, told a different story, retreating by 0.6% month-on-month. This figure contrasted with the previous month’s growth of 0.1% and underscored a broader trend of economic uncertainty.
The impact of this retail data extended to the currency markets, where the British Pound faced heightened selling pressure. The GBP/USD pair encountered fresh supply, accelerating its decline below the 1.2200 mark. This movement reflected investor reactions to the unexpected downturn in Retail Sales and concerns about the UK's economic outlook.
Meanwhile, the EUR/USD pair weakened, hovering near 1.0300 in early European trading on Friday. The Euro's decline was partly driven by expectations of further rate cuts by the European Central Bank, which weighed on its performance against a cautiously optimistic US Dollar.
Bitcoin stood out as a resilient asset amid the currency fluctuations, trading above $100,900 on Friday. The cryptocurrency has shown a notable rally, rising nearly 7% over the past week.
The disappointing UK data comes as a significant surprise to analysts who had predicted a positive trend in December’s retail activities. This shift in retail performance could potentially influence monetary policy decisions and investor sentiment moving forward.