UK Retail Sales and PMIs Point to Rising Economic Risks – TD Securities Warns of Downturn

TD Securities warns that weakening UK retail sales and sub-50 PMI readings signal rising economic risks and a heightened chance of recession, shifting market sentiment toward downside. Retail volumes fell for two months and the composite PMI slipped to 49.8 in March 2025, prompting expectations of greater volatility in sterling, gilts and UK equities. Markets reacted with sterling weakening (to $1.24), UK gilt yields easing and the FTSE 100 sliding ~0.8%; investors are increasingly pricing in a Bank of England rate pause and possible cuts later in 2025. TD recommends defensive positioning and hedges on UK exposure while policymakers weigh trade-offs between supporting growth and containing inflation.