The pound strengthened to an eight-week high against the dollar after U.K. retail sales increased in July more than analysts forecast, adding to evidence Britain’s economy is gathering pace.
Sterling advanced for a fifth day against the euro, the longest run of gains since April, as the improving data spurred bets the Bank of England will need to raise interest rates to restrain inflation. U.K. government bonds fell, pushing 10-year yields to the highest since August 2011, as demand for the safety of fixed-income assets waned. Britain’s borrowing costs rose as the Debt Management Office sold 2.25 billion pounds ($3.5 billion) of 20-year gilts.
“It’s consistent with all the data that has come out recently,” said Adam Cole, head of Group-of-10 foreign-exchange strategy at Royal Bank of Canada in London. “We are generally bullish on sterling.”