Pound sterling jumps to one month high after UK retail data sales surge as consumers shrug off Brexit fears

The currency is still over 15 per cent down on the dollar since the EU referendum in June: Reuters

Stronger-than-expected retail sales data helped push sterling to a one-month high against the dollar on Thursday.

According to figures from the Office for National Statistics (ONS), sales volumes grew by 1.4 per cent in February, well ahead of the 0.4 per cent growth the City consensus had anticipated.

Sterling jumped to $1.2528 on the news, its highest since late February and was still trading above $1.25 at market closing time in London.

“The concerns about the UK economy are overdone,” Nick Gartside, international chief investment officer for fixed income at JPMorgan Asset Management, told Reuters.

The pound also gained against 16 other major currencies, including the euro, according to Bloomberg data.

“Today’s figures show shoppers are getting a spring back in their step, providing a much needed boost to the high street,” said Alex Marsh, managing director at Close Brothers Retail Finance.

Earlier this week the currency rose to a fresh three-week high against the dollar after a larger than expected jump in inflation sparked expectations that the Bank of England may raise interest rates sooner than previously forecast.

The currency is still over 15 per cent down on the dollar since the EU referendum in June and remains volatile, tending to jump or drop on any rhetoric around the nature of Brexit and any data providing insight into the state of the economy.

And most economists predict the pound is not likely to recover from its post-referendum lows any time soon.

According to poll of more than 60 banks and research institutions conducted by Reuters that was released earlier this month, forecasters on average expect the currency to trade at $1.23 against the dollar by the end of June, and drop to $1.21 in the subsequent three to six months.

"It's worth noting that when we look at the reaction to retail sales, it's typically inconsistent and short-lived, mainly because of the actual volatile nature of the underlying data series," ING currency strategist Viraj Patel told Reuters.

"The headline (number) is great, but the actual underlying story is still weakening ... that's what matters for a policymaker," he added.

See how much you could save on international money transfers with HiFX: sign up and make a transfer