The Confederation of British Industry showed retail sales rose at the fastest pace in three years in July which helped lift the Sterling against other currencies including the dollar and euro. The GDP rose beyond economist’s optimistic predictions.
Howard Archer, chief European and UK economist at IHS Global Insight said: “Following on from last week’s news that GDP growth had surprised sharply on the upside in the second quarter, some more very good news on the UK economy.”
“Nevertheless, the suspicion remains that further out consumers are likely to find life hard and will be constrained in their spending.”
The sterling rose to a high of $1.5578.
“Sterling has been going up with risk generally and today’s retail sales data points to sustained growth over the summer,” said market economist at Lloyd’s Banking Group, Kenneth Broux.
How the sterling performs Wednesday will be watched. Analysts expect the usual downside for the sterling after the members of the Bank of England’s Monetary Policy Committee appear before the Treasury Select Committee.
“MPC testimonies have not been kind to sterling on the last three or four Treasury Select Committee hearings,” said Lloyd’s Kenneth Broux.