British consumers shunned stores during the crucial Christmas trading period, confounding predictions of a rebound in spending and stoking speculation that the Bank of England will cut interest rates this month.
The pound fell after the report, the latest in a string of disappointing U.K. data in recent days, and traders moved to price in a 75% chance of a cut at the BOE’s Jan. 30 meeting.
Weak growth and inflation figures this week have added to expectations, fueled by dovish comments from BOE Governor Mark Carney and other policy makers, that a rate cut could be imminent. Crucially, the sales survey was taken between Nov. 24 and Dec. 28, meaning much of it encompassed the period following Boris Johnson’s commanding win in the Dec. 12 general election -- undermining speculation the economy will see a bounce amid reduced political uncertainty.
Retail sales have fallen or stagnated in each of the past five months, the longest run without growth since records began in 1996, the Office for National Statistics said Friday. A 1% decline in the fourth quarter was the largest since the start of 2017 and weighed on the economy. [...]
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