The pound strengthened against the euro this week as a government report showed U.K. retail sales grew at a record pace for a December, adding to optimism the recovery is gaining momentum.
Sterling posted its fourth weekly gain in five weeks versus the common currency as separate data showed inflation slowed, allowing Bank of England Governor Mark Carney to keep interest rates at a record low to help the economy build momentum. The pound has appreciated at least 2 percent versus all its major counterparts in the past six months. U.K. government bonds advanced for a third week.
“Sterling has been supported by the stronger-than-expected retail sales data,” said Manuel Oliveri, a foreign-exchange strategist at Credit Agricole Corporate & Investment Bank in London. “We think the pound has scope to trend higher versus the euro but it’s not a fast mover. The market is already long of sterling,” he said, referring to a bet it will strengthen.