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Sterling rises slightly on retail sales jump, remains below $1.25

Sterling rose slightly on Friday but remained under the $1.25 mark after hitting almost three-week lows as retail sales rebounded in May more strongly than hoped with the country gradually relaxing its coronavirus lockdown.

British retail sales jumped 12% last month after a historic 18% slump in April, official data showed on Friday. Consumer confidence figures for May were the strongest since the lockdown began but remained weak overall, according to a separate survey.

Michael Hewson, chief market analyst at CMC Markets UK, said

the rebound in sales helped to improve risk appetite. “It has been notable in recent weeks that the pound has been a proxy for risk, doing well when equity markets are rising.”  

The pound was 0.03% higher against the dollar at $1.2433, having touched a low of $1.2403 in the previous session, the lowest since June 1. Against the euro, the pound was last 0.02% higher at 90.18 pence.

Bank of England Governor Andrew Bailey said on Thursday the economy appeared to be shrinking a bit less severely in the first half of 2020 than the BoE feared last month.

The pound slumped more than 1% against both the euro and the dollar on Thursday after the BoE increased its bond-buying programme by 100 billion pounds ($124 billion) to bolster the coronavirus-hit economy.

The central bank also kept its benchmark interest rate at 0.1% and said it expected a new total of 745 billion pounds in government bond purchases by the end of the year.

Brexit-related risks also continued to weigh on sterling. British Prime Minister Boris Johnson told visiting French President Emmanuel Macron on Thursday that talks on a post-Brexit deal cannot drag on into the autumn.

Britain left the EU on Jan. 31 but talks on a future relations have so far made little progress, with both parts saying a deal is achievable, but they also say time is running out and the prospect of a no-deal outcome remains.

Source: Reuters

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