UK: BoE and retail sales lined up on a busy day - TDS

Research Team at TDS, suggests that it’s going to be a busy day for the UK with retail sales for August and the Bank of England’s rate decision.

Key Quotes

“Starting with retail sales, we look for the trend of fairly strong consumption to hold up for another month. Volumes should be supported by still-soft price pressures during the month, plus the good summer weather and the bounce in consumer sentiment in August should help to support sales eke out a 0.2% gain (mkt -0.4%) on the back of the 1.4% jump in July.

For the Bank of England decision, rates are QE are unanimously expected to remain unchanged, so it will be up to the statement and minutes to guide market direction. Our base case forecast is for a slightly dovish outcome, with the MPC repeating the line from last month that “If the incoming data prove broadly consistent with the August Inflation Report forecast, a majority of members expect to support a further cut in Bank Rate to its effective lower bound…” and that it “could act further along each of the dimensions of the [August] package” with respect to further easing.”