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'Dreadful' retail sales derail pound's election rally

Sterling's election rally runs out of steam after big fall in UK retail sales in March.

 
'Dreadful' retail sales derail pound's election rally

A big fall in UK retail sales has weighed on the pound, derailing a rally that has taken hold since prime minister Theresa May called for a snap general election.

Retail sales fell 1.5% in March, a much bigger drop than the 0.5% investors had been expecting. That cut short the rally in the pound, which had been making further gains against the dollar before the news, leaving sterling down 0.1% at $1.28, but still up 2.2% over the week.

James Knightley, senior economist at ING, said the figures were 'dreadful'. 'We caution that this release is incredibly volatile and looking at a single month figure is almost meaningless, but the general trend is suggesting that there is a loss of momentum,' he said.

'This is a really dire retail sales performance - there is no other word for it,' added Howard Archer, chief UK and European economist at IHS Markit.

'Worryingly for UK growth prospects, the fundamentals for consumers look highly likely to see further deterioration over the coming months as rising inflation eats further into purchasing power with the squeeze reinforced by muted earnings growth,' he added.

The news hit consumer stocks, which were the worst performing sector on the FTSE 100, dragging the index eight points lower to 7,110.

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