UK retail sales in August rose by the most in 4 months, in what is another positive data point for the pound. A rise of 1.0% m/m is well above the consensus forecast for a 0.2% increase and the news has been warmly greeted by sterling traders with the pound popping higher immediately after the release.
The pound had pulled back a little this week following the stellar gains seen last time out but this morning’s data has provided a further catalyst for gains with the GBPUSD rising back close to last week’s high around the 1.36 handle. The appreciation in the pound has weighed on the FTSE 100, with the benchmark dropping back lower after rising to its highest level of the week shortly after this morning’s open. The index remains below the key 7300 level and could well come under more selling pressure going forward, especially if the pound takes another leg higher.