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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

UK retail sales soar in January

Following a disastrous December, UK retail sales rebounded dramatically in January, with volumes rising more than 3%.

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These numbers today come after an extremely disappointing December in which retail sales fell by more than 3%. Economists had forecast retail sales to be just 1.2% up in January.

(AI Video Summary)

The UK economy

The UK economy has recently entered a rough patch, experiencing a recession in the last two quarters of 2020. However, retail sales numbers tell a different story. In January, sales shot up by an impressive 3.2% compared to the previous month, surpassing the predicted 1.5% increase. This follows a record-breaking surge in December that was the highest monthly increase since the pandemic hit in 2021. Despite the recession, these strong retail sales figures point to a promising start for the London markets.

GBP/USD

When we take a look at the five-minute chart of the GBP/USD, we notice a significant jump in the pound's value once the retail sales numbers were released. This upward trend suggests a positive response from the market. However, when we examine the daily chart, we see that the pound's value seems to be stuck at low levels. There's even a chance that the support level of 1.2518 might be broken soon, which could lead to further declines. If this happens, we could be witnessing a topping pattern and potentially see the pound drop to 1.22, a level not seen since December of last year.

In conclusion, while the UK economy is officially in recession, the retail sales numbers paint a more optimistic picture. The substantial increase in January indicates a strong start for the London markets. However, the value of the pound remains uncertain. Although there has been a temporary rise, the currency's long-term trend remains stagnant, and there is a possibility of further declines if the support level is breached.

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