By Lucy Raitano
LONDON (Reuters) -Sterling held firm on Friday and was poised to post gains for a third consecutive week, helped by better-than-expected UK retail sales numbers.
Against the euro, the pound was flat at 83.39 pence. Against the greenback, it was little changed at $1.36035.
Sales volumes in the UK in January rose 1.9%, surpassing forecasts of a 1.2% rise, as consumers began to return to more normal buying behaviours after a 4% drop in December 2021.
"However, the key issue going forward will be whether this apparent bounce back in consumption will be able to withstand the forthcoming increase in taxation and energy bills set to hit in April, which together will take a significant chunk out of worker pay packets," said Stuart Cole, Head Macro Economist at Equiti Capital.
Expectations of a rate hike by the Bank of England continue to provide some support for the pound, with data published this week showing inflation rising to a nearly 30-year high.
Money markets are expecting a rate hike next month and have priced in as much as 136 bps of rate increases for the remainder of the year.
After a rally this week, Friday saw safe-haven currencies such as the Japanese yen and Swiss Franc fall back as risk-sensitive currencies like the Australian dollar advanced. [FRX/]