U.K. consumer sentiment index rises in August, consumer spending growth likely to remain weak in Q3

The U.K. consumer sentiment survey released by GfK came in surprisingly positive for the month of August. The GfK consumer confidence index rose by 3 points to -7 percent, the top end of the recent range. Consumers’ assessment of their personal financial situation rebounded – the backward-looking indicator rose by 3 points to 4 percent, coming out of the -1 percent to 3 percent post-Brexit-referendum range.

This led to a marked rise in the ‘climate for major purchases’ index from -2 percent to 6 percent, a 15-month high. However, the assessment of the economic outlook for the coming 12 months was unchanged at the lowest level in 2018.

This implied that the Bank Rate rise at the beginning of the month did little to change household expectations. With Brexit negotiations supposedly heading into the home straight, and the summer-spending boost likely to wear off over the months ahead, today’s improvement is not expected to mark a beginning of a new trend for consumption, noted Daiwa Capital Market Research.

“Indeed, despite the ongoing tightening in the labour market, we continue to expect that consumer spending growth, and the overall rate of economic expansion, will remain subdued this quarter”, added Daiwa Capital Market Research.

At 19:00 GMT the FxWirePro's Hourly Strength Index of British Pound was neutral at 21.9729, while the FxWirePro's Hourly Strength Index of US Dollar was slightly bullish at 64.4832. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex