• UK retail sales rebound in Feb, pound spikes

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    LONDON: British retail sales rebounded strongly last month despite Brexit jitters, official data showed Thursday, sparking a spike in the pound.

    Retail sales rallied 1.4 percent in February after a drop in January when rising food and fuel prices weighed on consumer spending, the Office for National Statistics (ONS) said in a statement.

    Expectations had been for a much smaller increase of 0.4 percent, after a revised drop of 0.5 percent in January.

    “Markets reacted favourably to the release, with the pound rising fairly sharply,” said Capital Economics analyst Paul Hollingsworth.

    “Indeed, with consumer demand having been the key driver of the economy’s post-referendum resilience, signs that it had been fading meant that this release probably attracted more attention than usual.”

    The pound jumped to a one-month peak at $1.2527 on growing hopes of an interest rate hike.

    Better sales of goods across the board were behind the February increase, with the exception of food sales which stagnated, ONS said.

    Sterling later stood at $1.2518, up from $1.2483 in New York late on Wednesday.

    “The odds on an interest rate rise are now close to even stevens, thanks to a trio of economic data which have boosted expectations, and pushed up the value of the pound on international currency markets,” said analyst Laith Khalaf at stockbroker Hargreaves Lansdown.

    “Retail sales came in above expectations, following hot on the heels of rising inflation figures released earlier this week.

    “Meanwhile one dissenting voice in the latest Monetary Policy Committee decision to keep interest rates on hold was pounced upon as evidence of the start of a shift in policy.”

    The Bank of England’s rate-setting MPC panel voted 8-1 to keep rates on hold at a record-low of 0.25 percent this month.

    Added to the mix, official data showed this week that British annual inflation surged in February to 2.3 percent—the highest level in almost three and a half years.

    The BoE’s main task is to use monetary policy as a tool to keep inflation close to a target level of 2.0 percent.

     

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