UK Retail Sales Beat Forecasts, Sterling Holds Gains

UK retail sales volumes rose 1.2% month-on-month in May, comfortably beating the 0.5% consensus forecast and offering the latest sign that consumer spending is holding up despite high interest rates. Sales were also up 3.2% from a year earlier. Retailers pinned the strength on promotional activity and unusually warm weather, which lifted demand across both physical stores and online channels.

The biggest gains came from non-store retailers, where volumes jumped 6.1% on the month – the largest increase since February 2025 and enough to push volumes to their highest level since January 2022. The broader trend also improved. Retail sales rose 0.4% in the three months to May compared with the preceding three-month period and were 1.4% higher than a year earlier.

The data reduces the case for a near-term rate cut from the Bank of England, economists said. A resilient consumer keeps pressure on services inflation and gives the Monetary Policy Committee room to hold rates steady at the August meeting. Sterling edged higher after the release, extending a modest recovery against the dollar.

The next test for the pound comes with the May CPI print due next week. A hot number would reinforce the message that the BoE can afford to wait. A soft print would revive bets on an August cut, traders said. For now, the retail sales beat keeps the burden of proof on the doves.

For traders positioning around the BoE decision, the GBP/USD profile offers a clean framework for tracking rate differentials and support levels. The best forex brokers list includes platforms with direct access to sterling crosses and real-time economic calendars.