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Sterling steady ahead of UK retail sales data
[LONDON] Sterling held near week lows against the dollar on Friday as investors awaited the latest batch of British retail data for more clues on an economy which has proved resilient since the UK voted to exit the European Union in June.
The pound - down by around a fifth in just over a year against the greenback - hovered below US$1.25 while markets wait to see if an expected weakness in December retail sales numbers were the start of a softening trend for consumer spending ahead.
Market analysts expect slightly weaker sales growth of 3.4 per cent year on year in January on the back of the notion that rising inflation is starting to take its toll on consumer spending.
"Upside for sterling is limited because the political uncertainty around Brexit remains intact," said Crédit Agricole FX Strategist Manuel Oliveri.
Slower wage growth numbers in Britain and a surge in the US dollar after US Federal Reserve chair Janet Yellen hinted at an early interest rate hike sent sterling to a one-week low of US$1.2379 on Wednesday, while softer British inflation data on Tuesday suggested to analysts that the Bank of England will not raise interest rates any time soon.
The pound underperformed gains for other major currencies against the dollar on Thursday as nerves around Brexit and the strength of the British economy weighed on prices.
Brexit minister David Davis said this week that government was on course to meet its end-March deadline to launch the formal divorce procedure from the EU but did not see Britain doing so at an EU summit next month.
Sterling was up over 0.2 per cent against the euro after capping its best run in over four months earlier in the week as the euro zone currency struggled to shake off French political worries and Greek debt strains.