UK retail sales fell for ten months, but recent data shows a slight improvement in outlook.
by VT Markets
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Jul 28, 2025
**UK Retail Sales Drop**
Consumer spending continues to struggle, even with a slight improvement from a very poor reading last month. Sales have now fallen for ten consecutive months, highlighting a significant issue in the UK economy. This trend indicates that many households are facing serious financial pressure.
Recent data from the Office for National Statistics backs this up, revealing that retail sales volumes are still 1.7% lower than their levels before the pandemic in February 2020. Although UK inflation has recently met the Bank of England’s target of 2% for the first time in nearly three years, it has not yet led to increased spending. This makes the situation challenging for the central bank.
**FTSE 250 and British Pound Forecast**
In light of these developments, we think it’s wise to buy put options on the FTSE 250 index over the coming weeks. This index reacts more closely to the domestic UK economy than the more global FTSE 100. Historically, during periods of weak domestic growth, like in the early 1990s and 2008, the FTSE 250 has performed poorly.
The ongoing weakness in consumer spending also suggests a negative outlook for the British pound. We are exploring short positions in GBP/USD futures since the currency has had trouble maintaining values above 1.27 amid concerns about the economy’s strength. This ongoing economic weakness may push the Bank of England to hint at future interest rate cuts more aggressively than the markets currently anticipate.
The uncertainty highlighted by Martin Sartorius, the principal economist at the Confederation of British Industry, indicates that market volatility could increase. He pointed out that disappointing sales figures are affecting many retailers. Therefore, we are also looking into strategies to take advantage of volatility in select consumer-discretionary stocks that are most vulnerable to this spending decline.
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by VT Markets
Jul 28, 2025
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