The British pound appreciated on Thursday against the US dollar following the release of retail sales data, which showed the strongest growth in 14 years. However, the UK currency was unable to maintain its gains as uncertainty about the nationâs future as a member in the European Union overshadowed the positive data.
A report issued by the Office for National Statistics earlier today said that retail sales volumes rose by 1.9% in October from September, which is double the expected increase. The report also said that volumes rose by 7.4% compared to October 2015, marking the biggest gain since April 2002. Retail sales value also rose by 2.1% in October compared to September and by 6.6% compared to October 2015; the biggest gain since January 2011.
The pound initially rose as optimism toward the British economy rose following the data release. However, investors quickly speculated that the impressive gains in retail sales can be attributed to attempts from consumers to avoid the inevitable price increases that will be caused by the declining value of the pound. Inflation in the UK edged down to 0.9% in October, according to the Office for National Statistics, but it is expected to rise in the coming months as prices of raw materials surge against the pound.
GBP/USD traded at 1.2438 as of 15:32 GMT after the pair rose to 1.2503 at 11:34 GMT today. The pairâs lowest level today was at 1.2414 at 08:35 GMT, which it touched after opening at 1.2439. EUR/GBP was at 0.8584, near its lowest level for the day at 0.8576. The pair started trading today at 0.8590.
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