Sterling stagnates despite strong UK retail sales

Currency is at its least volatile in years as investors await EU divorce details

Photograph: iStock

Photograph: iStock

 

Sterling scarcely moved on Thursday with strong British retail sales data doing little to shake the currency out of a slumber following a six-month extension to Brexit.

Wild swings in the pound subsided last week when European Union leaders granted Britain the Brexit delay to October 31st.

The currency is now at its least volatile in years as investors await a breakthrough in Britain’s EU divorce process.

British shoppers ignored worries about an impending Brexit deadline and spent heavily in March, official data showed on Thursday, beating all forecasts in a Reuters poll of economists.

The pound was little moved, though, edging up against the euro and barely shifting versus the dollar.

“Such data has been pushed into the backseat over recent months, quiet and insignificant, as markets focus instead on the drama of Brexit,” said Sebastien Clements, currency analyst at OFX.

Retail sales volumes surged by the most in nearly two-and-a-half years in annual terms, leaping by 6.7 per cent.

The Bank of England has signalled it will lift interest rates to stop inflationary pressures from building, but it is highly unlikely to act until Brexit is resolved.

At 0900 GMT sterling was down 0.2 per cent against the dollar at $1.301 and flat against the euro at 86.54 pence .

On Wednesday, a report in the Guardian newspaper that talks between the Labour opposition party and the ruling Conservatives to resolve a parliamentary deadlock over the terms of Brexit had stalled sent the pound tumbling. A spokesman for the Labour party denied that the talks had hit an impasse. – Reuters