Pound Climbs to One-Month High as U.K. Retail Sales Rebound

  • Sterling advances after sales beat economists’ median forecast
  • U.K. 10-year gilt yield rises from an almost three-week low

The pound climbed to the highest level in a month against the dollar after U.K. retail sales rebounded in February.

Sterling gained versus all of its 16 major peers, while government bonds fell as sales rose 1.4 percent after sliding a revised 0.5 percent in January, the Office for National Statistics said Thursday. The median forecast in a Bloomberg survey of economists was for an increase of 0.4 percent.

Earlier this week, data showed that annual inflation accelerated in February to exceed the central bank’s 2 percent goal for the first time since 2013, spurring speculation that policy makers will raise rates next year. Last week Bank of England policy maker Kristin Forbes voted for an interest-rate increase, with some others indicating they may not be far behind her.

“This will likely strengthen the ongoing market speculation about BOE policy normalization before long given the hawkish dissent we had at the MPC meeting last week and the above-target inflation for February released on Tuesday,” said Valentin Marinov, head of G-10 FX research at Credit Agricole. Still, the longer-term outlook for the U.K. economy will remain challenging, according to Marinov.

  • The pound rose 0.15% to $1.2504 as of 9:50 a.m. in London; it touched $1.2527 earlier, the highest since Feb. 24
  • On charts, resistance is at 1.2570-82, the highs on Feb. 24 and Feb. 9
  • Interbank offers above $1.2510 were filled, causing the rally to lose steam momentarily, traders in London, who requested anonymity because they aren’t authorized to speak publicly, said
  • Further offers are seen at $1.2570-80
  • The yield on benchmark 10-year gilts increased one basis point to 1.19%, after touching 1.17%, the lowest since March 6

— With assistance by Vassilis Karamanis, and Sejul Gokal

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