Pound Rises On Robust U.K. Retail Sales Data

(RTTNews) - The British pound strengthened against other major currencies in the European session on Friday, after U.K. retail sales rebounded more than expected in April as good weather boosted food store sales.

Data from the Office for National Statistics showed that the U.K. retail sales grew 1.2 percent on a monthly basis in April, following a revised 0.1 percent rise in March. Sales were expected to climb only 0.3 percent.

The four consecutive monthly rises in retail sales led to a 1.8 percent increase in the three months to April period compared to the previous three months. Sales, thus, marked the biggest three-monthly rise since mid-2021.

Moreover, on a yearly basis, sales volume increased 2.6 percent in the three months to April, posting the largest growth since March 2022.

Year-on-year, retail sales growth accelerated more-than-expected to 5.0 percent from 1.9 percent in March. Sales were forecast to grow 4.5 percent.

A monthly survey today showed that British consumer confidence strengthened in May on hopes of easing trade tensions and the interest rate reduction by the Bank of England.

The GfK consumer confidence index rose to -20 in May from -23 in April, survey results showed Friday. All five key indicators improved in May, led by two forward-looking findings.

Signs of robust household spending are expected to fuel hopes that Bank of England (BoE) officials will not decrease interest rates at their June meeting. This week, higher-than-expected UK Consumer Price Index (CPI) data for April forced traders to reduce BoE dovish bets.

In the European trading today, the pound rose to more than a 3-year high of 1.3502 against the U.S. dollar and a 3-day high of 1.1156 against the Swiss franc, from early lows of 1.3419 and 1.1107, respectively. If the pound extends its uptrend, it is likely to find resistance around 1.36 against the greenback and 1.12 against the franc.

Against the yen and the euro, the pound edged up to 193.50 and 0.8406 from early lows of 192.82 and 0.8419, respectively. The pound may test resistance around 196.00 against the yen and 0.82 against the euro.

Looking ahead, Canada retail sales data for April, U.S. existing home sales data for March and U.S. Baker Hughes oil rig count data are slated for release in the New York session.