European market awaits March's retail sales data from the United Kingdom with slightly high expectations after a reports released earlier this week showed UK's public finances UK slowed to meet the central bank’s target.
Retail Sales Ex. Auto likely fell 0.5% vs. 1.8%
Retail Sales Ex. Auto probably rose to 4.5% vs. 4.2%
Retail Sales Incl. Auto probably dipped 0.4% after 1.7% increase
Retail Sales Incl. Auto likely inched to 3.8% after 3.7%
Expectations, as we can see, are running high for the first quarter of 2014, as earnings growth strongly influences retail industry, we could actually see some improvement in the figures. Solid retail data would further add more steam to the UK recovery.
Growth data due April, 29 is expected to show Gross Domestic Product (GDP) rose by 0.9 percent in the first three month of the year, although annual growth sharply climbed to 3.2 percent.
The BoE stands pat on its accommodative policy and holding rates at the historic low rate of 0.5% as far as inflation outlook remains in check. With the signs of improvement in the economy and outlook for higher commodity prices inflation might again prove stubborn to return to the 2.0% target set by the BoE.
Minutes released also earlier this week of the Bank of England’s (BoE) April meeting showed members were uncertain over economic slack and also held differing views on the outlook for inflation over the medium term.
Meanwhile, a separate report showed that the UK government has hit its target for deficit reduction for 2013-2014 financial years.
Public sector net borrowing came in at 107.7 billion pounds, or 6.6% of Gross Domestic Product - The smallest deficit in five years and in line with the 107.8 billion pounds projected by the Office for Budget Responsibility last month.
The pound weakened slightly against the dollar in Europe today, however, the pair would receive support if we see rebound in retail volumes, but if expectations fall short we also might some downside pressure on the pound.
