U.K. retail sales fell 3.9% in June from a record high 3.6% the month prior, the most since at least 1986. The decline was led by a 6.9% drop in apparel purchases as many Britons started buying seasonal items in May due to abnormally warm weather. Food sales also declined 3.6% as costs for basic staples like rice remains at record levels. Inflation rising to 3.8% has sapped consumer purchasing power, and breached the BoE’s 3% threshold. However, the central bank left interest rates unchanged due to the weakening domestic demand and the biggest housing slump in at least 30 years.  continues to weigh on the U.K. economy, with growth in the second quarter expected to have slowed to 1.6% from 2.3% as it inches closer to a recession. The BoE recent vote of 7-1-1 at their last policy meeting with Tim Besley voting for a rate hike and David Blanchflower a rate cut demonstrates the lack of direction for the MPC. Blanchflower called for immediate action from his fellow members as the country heads towards a recession. However, as long as inflation concerns remain the BoE may leave rates unchanged for the remainder of the year. – John Rivera, Currency Analyst