UK Retail Sales data for March showed a notable rebound, rising 0.7% month-over-month, surpassing market expectations of 0.2% or 0.1% depending on the source, after a revised 0.6% decline in February [1][2][3][6]. Annual Retail Sales increased 1.7% in March, slightly below the prior 1.8% (revised from 2.5%) but above expectations of 1.3% [2][3]. Core Retail Sales, excluding auto fuel, grew 0.2% MoM, reversing a revised 0.6% drop, and advanced 1.7% YoY, down from February’s 2.7% (revised from 3.4%) [2][3].
Despite the positive retail sales surprise, the Pound Sterling's reaction was muted. GBP/USD steadied above 1.3450 after three days of losses, trading around 1.3470 during Asian hours, and was 0.04% lower at 1.3467 as of writing [2][3]. The British Pound was the weakest against the Japanese Yen among major currencies [3]. GBP/JPY found buyers above 215.00 but dropped near that level during European trade [1].
Market sentiment was influenced by persistent uncertainty surrounding US–Iran conflict and elevated oil prices. The US Dollar Index held near weekly highs around 99.00, reflecting strength as oil prices remained elevated due to fears of a prolonged closure of the Strait of Hormuz [4][5][6]. Brent crude futures rose 0.4% to $105.44 a barrel, and WTI was marginally higher at $95.88 [6]. Asian stocks were mixed, with Japan's Nikkei 225 up 0.61% as annual inflation remained below the BoJ’s 2% target, while other Asian indices declined [5]. European stocks opened lower, with the Stoxx 600 down 0.6%, FTSE 100 down 0.3%, and CAC 40 down 0.4% [6].
Looking ahead, the Bank of England is expected to hold interest rates steady at 3.75% in its upcoming policy announcement, though Chief Economist Huw Pill has stressed the need to tighten monetary conditions to contain price pressures [1]. The Bank of Japan is also expected to leave rates unchanged at 0.75% while expressing concerns over the economic outlook amid higher energy prices [1][5]. Japan's Finance Minister Satsuki Katayama warned of possible intervention against speculative moves keeping the Yen weak [1].
Geopolitical tensions remain a key market driver, with US military actions against Iranian oil tankers and threats in the Strait of Hormuz continuing to impact risk appetite and energy prices [2][5][6].
CONCLUSION
UK Retail Sales data exceeded expectations, providing a modest boost to sentiment, but broader market reactions were subdued amid ongoing geopolitical tensions and elevated oil prices. The Pound steadied, while global equities and currencies reflected caution. Upcoming central bank decisions and developments in the Middle East will remain critical for market direction.