U.K. consumer sentiment index rises in January, real wages developments likely to be significantly better

The latest GfK consumer sentiment survey showed that the U.K. consumers began the New Year in a slightly better mood. The headline indicator rose 4 points in January to a four-month high of -9. All the survey components came in slightly stronger; however, the forward-looking indicators for expectations of how personal finances and the economy would develop this year rose by more than the backward-looking ones.

The improved outlook also appears to have made consumers slightly more relaxed about making major purchases, with the relevant indicator recording the biggest rise, up by 5 points to 1. But, while GDP growth at the end of 2017 was slightly stronger than many expected and the latest employment growth figures surprised on the upside, there is little new economic data to imply that the squeeze on household budgets had considerably eased, noted Daiwa Capital Markets Research.

The overall consumer sentiment continues to be at a comparatively low level and below the average for last year.

“We are likely to need to see some significantly better news about developments in real wages before consumer confidence is restored to higher levels”, added Daiwa Capital Markets Research.

At 16:00 GMT the FxWirePro's Hourly Strength Index of British Pound was bullish 91.0608, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -7.49835. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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