– U.K. Retail Sales to Contract for First Time Since December.

– Will Slower Consumption Encourage the BoE to Further Delay Normalizing Monetary Policy?

Trading the News: U.K. Retail Sales

The U.K. Retail Sales report may produce headwinds for the British Pound and drag on GBP/USD as signs of a slowing recovery provides the Bank of England (BoE) with greater scope to further delay its normalization cycle.

What’s Expected:

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Why Is This Event Important:

Even though BoE argues that the next policy move will be to lift the benchmark interest rate off of the record-low, the Monetary Policy Committee (MPC) may preserve its current policy throughout 2016 in an effort to mitigate the downside risks surrounding the real economy.

Expectations: Bearish Argument/Scenario

Release

Expected

Actual

CBI Trends Total Orders (MAR)

-14

-14

NIESR GDP Estimate (FEB)

—

0.3%

GfK Consumer Confidence (FEB)

3

0

The recent weakness in household sentiment accompanied by the slowdown in economic activity may drag on private-sector consumption, and a dismal sales report may spur a bearish reaction in GBP/USD as market participants push out bets for a BoE rate-hike.

Risk: Bullish Argument/Scenario

Release

Expected

Actual

Jobless Claims Change (FEB)

-9.1K

-18.0K

Average Hourly Earnings ex. Bonus (3MoY) (JAN)

2.1%

2.2%

Net Consumer Credit (JAN)

1.4B

1.6B

Nevertheless, the expansion in private-sector lending paired with the ongoing improvement in labor-market dynamics may boost household spending, and a positive development may generate a near-term rebound in GBP/USD as it puts pressure on Governor Mark Carney and Co. to normalize monetary policy sooner rather than later.