Sept 20 (Askume) – The pound gained against the dollar and the euro on Friday, with strong UK retail sales data further boosting the pound’s positive trend.
The pound briefly hit $1.33405, hitting its March 2022 highest for a third consecutive day, but gave up earlier gains to close at $1.32975.
It rose 1.23% this week.
Nordea chief economist Niels Christensen cited Friday’s strong UK retail sales report as well as this week’s inflation data and the Bank of England’s interest rate decision as reasons for the rise.
Official data showed UK retail sales rose 1% in August , stronger than expected , and July’s growth was revised upwards.
Christensen said that looking ahead, the British data is “not so optimistic” and interest rate cuts are expected to continue further.
“That’s why we’re seeing sterling strengthen not just against the yen, but also against the dollar and the euro,” he added.
The euro fell 0.10% to 83.97 pence, recovering slightly from losses to its lowest in two years.
Sterling rose on Wednesday as data showed UK inflation remained steady in August but the services sector, which the Bank of England closely monitors, rose to 5.6% from 5.2% in July.
The cautious Bank of England kept interest rates at 5.0% on Thursday, while its rate setter Catherine Mann said on Friday she was cautious about the prospect of multiple rate cuts in the coming months and was holding off on further action.
The currency market estimates that there is a 71% chance that the Bank of England will cut interest rates by 25 basis points at its next meeting in November.
GBP/JPY rose 0.90% to 191.16 as the yen weakened as the Bank of Japan governor refrained from talking up interest rate hikes after deciding to keep rates unchanged.
“The weaker yen further boosted the pound,” Christensen said.
