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31 Oct 2013
Dip in UK consumer confidence may be the beginning of a difficult UK fourth quarter
FXstreet.com (London) - The drop in UK consumer confidence may be the first breeze of fourth quarter headwinds for the UK economy.
Market research company GfK's consumer confidence index fell for the first time in six months, falling from -10 to -11 against expectations of a rise to -8.
The figure however remains 20 points higher than this point last year.
Sterling has seen a strong third quarter on consistently robust macro data and economic growth. GBP/USD has climbed steadily from 11 July lows around USD1.4900 to above USD1.6200.
But the UK could face a difficult fourth quarter, thanks to rising fuel prices and inflation continuing to outstrip wage rises.
Real wages have fallen by 5.5 percent since 2010 – with only Greece, Portugal and Holland performing worse.
Hourly wages grew just 0.7 percent in the year to August, while CPI ran at 2.7 percent over the same period, according to the Office for National Statistics.
The strengthening UK economy has largely written off any possibility of further inflation-driving QE, but continuing record-low base rates will continue to put pressure on real wages and on consumer confidence and retail spending as a result.
Market research company GfK's consumer confidence index fell for the first time in six months, falling from -10 to -11 against expectations of a rise to -8.
The figure however remains 20 points higher than this point last year.
Sterling has seen a strong third quarter on consistently robust macro data and economic growth. GBP/USD has climbed steadily from 11 July lows around USD1.4900 to above USD1.6200.
But the UK could face a difficult fourth quarter, thanks to rising fuel prices and inflation continuing to outstrip wage rises.
Real wages have fallen by 5.5 percent since 2010 – with only Greece, Portugal and Holland performing worse.
Hourly wages grew just 0.7 percent in the year to August, while CPI ran at 2.7 percent over the same period, according to the Office for National Statistics.
The strengthening UK economy has largely written off any possibility of further inflation-driving QE, but continuing record-low base rates will continue to put pressure on real wages and on consumer confidence and retail spending as a result.