Morning Forex Fundamental: GBP

Morning Forex Fundamental: GBP

'There is still some hope that the economy has avoided a triple dip' - Vicky Redwood, an economist at Capital Economics Ltd.

Britain’s retail sales unexpectedly bounced back in February, after previous month’s slump, when heavy snowfall held back consumers, the Office for National Statistics said Thursday. Sales including fuel jumped 2.1% from January, when they dropped a revised 0.7%, exceeding analysts’ expectations, which called for a 0.4% growth. Year-over-year retail sales surged 2.6%, with consumers spending a total of £6.3 billion a week. As the U.K. economy is struggling to recover after a contraction at the end of 2012, an improvement in retail sales indicates that consumers are having more optimistic outlook and are likely to increase their spending.

'There is still some hope that the economy has avoided a triple dip,' said Vicky Redwood, an economist at Capital Economics Ltd. in London. 'From here, it is encouraging that the budget provided some further help for households. Nonetheless, with real pay still dropping sharply, a sustained recovery in consumer spending still seems unlikely soon.'

Alan Clarke, an analyst at Scotiabank, said: 'Retail sales were strong probably because prices were low. And when there are smaller-than-normal price increases in things like clothing, people spend more, so that's understandable.'