UK Retail Sales Overview

The UK Office for National Statistics will publish the monthly Retail Sales figures later this Friday, at 07:00 GMT. The report is expected to show that sales at the retail level declined sharply by 0.8% in February, compared to the 1.8% rise recorded in the previous month.

On an annualized basis, Retail Sales are forecasted to have increased by 2.1% during the reported month, down from 4.5% in January. Meanwhile, core Retail Sales – excluding fuel – are expected to come in at -0.8% MoM.

How could the UK Retail Sales affect GBP/USD?

Ahead of the key consumer spending data, the GBP/USD pair gains some positive traction and, for now, seems to have snapped a three-day losing streak amid a modest US Dollar (USD) downtick. Surprisingly positive data would reinforce the Bank of England's (BoE) hawkish outlook and provide an additional boost to the British Pound (GBP).

Conversely, a disappointing report could weigh on GBP. Adding to this, rising bets for an interest rate hike by the US Federal Reserve (Fed) should act as a tailwind for the USD and contribute to capping the GBP/USD pair.

That said, the immediate market reaction to a meaningful divergence from the anticipated Retail Sales figures is more likely to be limited as the market focus remains glued to developments surrounding ongoing conflicts in the Middle East.