UK: Focus on BoE and retail sales - SocGen

Kit Juckes, Research Analyst at Societe Generale, suggests that the BoE’s MPC doesn’t need to ease again until the fog clears around the post-referendum economy.

Key Quotes

“Today’s retail sales data will if anything, simply highlight how little we can really say about the current state of affairs. Of the last six months, underlying (ex auto fuel) retail sales have fallen in three (Feb, March and June) and risen in three (April, May, July). The 6-month annualised growth comes in at 5%. This month is expected to show a 0.8% fall, taking the annual rate to 4.7 from 5.4, but what does that tell us about the longer-term outlook?

The warning from Herman van Rompuy, ex-President of the EU, that serious ‘Brexit’ negotiations can’t start until after the German elections next Autumn, may be more informative. With the UK and EU unable to talk about conceding any ground on the conditions for access to the single market, we’re facing either a very long wait before Article 50 is invoked, or the UK will sleep-walk into a ‘hard’ exit that delivers the maximum economic disadvantage. Best then, that the MPC keep some ammunition up its sleeve. We’re short GBP vs USD and EUR.”