Pound Advances against Euro on UK Retail Sales

By TraderVox.com

Tradervox.com (Dublin) – The sterling pound advanced against the 17-nation currency after a report from UK showed that retail sales in the country climbed more than the market was expecting. The report has been construed as a sign that the UK economy is improving. The sterling pound strengthened against the US dollar as positive retail sales report followed another report released yesterday showing that unemployment claims in the country fell in September as the payrolls improved.

Simon Smith, the Chief Economist at in London at FXPro Group Ltd, said that the data from UK indicates that there is momentum behind the economy as the market searches for evidence that the UK is recovering from recession. Smith also noted that the labor-market data released yesterday was taken as positive for the pound hence its advance against the euro and the dollar. According to the Office for National Statistics, total retail sales improved by 0.6 percent in September as compared to the 0.4 percent gain expected by economists. The gain came after falling by 0.1 percent in August. The Office for National Statistics released a report yesterday showing that jobless claims dropped by 4000 to 1.57 million, last month.

In a note to clients, Elsa Lignos, a senior currency strategist in London at Royal Bank of Canada indicated that the pound has gained marginally due to the strong retail sales adding that these are volatile data. Robert Savage, the chief strategist at FX Concepts LLC in New York, predicted that the UK currency will weaken against the US dollar as a result of structural weaknesses in the UK economy. The sterling pound advanced by 0.6 percent against the euro to trade at 81.18 pence per euro at the close of trading yesterday in London. The pound had weakened by as much as 0.8 percent against the 17-nation currency over the last couple of days.  The pound was little changed against the dollar, trading at $1.6135 after it fell yesterday by about 0.2 percent.

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