The British pound surged to a 16-month high against the US dollar, after official data showed UK retail sales rose unexpectedly in March and public sector borrowing remained below the government’s target for the fiscal year ending March.
GBP/USD rose to the highest level since December 2009 hitting 1.6564 during early European trading.
Retail sales in Britain went up by 0.2 percent in March following a downwardly revised 0.9 percent drop in the previous month, the Office for National Statistics said on Thursday. Markets had expected the UK retail sales to record a 0.5 percent decline in the month.
Separately, public sector borrowing excluding financial interventions stood at 141.1 billion pounds for the fiscal year ending March, below the estimate of 145.9 billion pounds by the Office of Budget Responsibility (OBR).
Cable also traded higher against the euro, with EUR/GBP dropping 0.15 percent to trade at 0.8836.
The Bank of England (BoE) Monetary Policy Committee (MPC) meeting minutes on Wednesday showed that six policymakers voted in favor of maintaining the interest rates at record low of 0.5 percent, while three members voted against the proposition.
However, the policymakers said that there remained a significant risk that inflation would exceed 5 percent in the near term.
“Uncertainty around Q1 GDP remains elevated and we continue to expect the MPC to remain on hold until November,” said a note RBC Capital Markets.