FXStreet (Delhi) – James Knightley, Research Analyst at ING, notes that the UK retail sales growth in September is astonishingly strong, rising 1.7%MoM excluding fuel and 1.9%MoM including fuel – these are volume based figures.
Key Quotes
“Much of these increases reflected strong bounce-backs following a weather depressed August trading period, but there wasn’t such good news for clothing (-0.9%MoM) and “other stores” (-0.6%).”
“August’s growth was revised down six tenths, but even so this report is a very positive outcome (consensus was +0.4%). Indeed, YoY growth is now at 6.5%YoY so this bodes well for next week’s 3Q GDP number and provides a strong platform for 4Q growth.”
With employment and real wage growth rising strongly, the housing market looking strong and consumer confidence at very high levels, there is a growing likelihood that Ian McCafferty will be joined by one, maybe two more MPC members in voting for a rate hike at the November 5th MPC meeting. Moreover, with Mark Carney continuing to hint that he feels it will be a close call for him in terms of whether to vote for a hike around the turn of the year, market pricing of the first rate hike in late 2016/early 2017 seems far too cautious.”
“We continue to look for a 1H16 move. However, we doubt the BoE will want to move ahead of the Federal Reserve given the implications for sterling, exports and manufacturing, even though they have done it in the past.”
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