LONDON: British retail sales picked up much more than forecast in October, a survey showed on Tuesday, further increasing the chances that Britain's economic recovery will continue.
At the same time, the unexpectedly upbeat survey among retailers added to views that the Bank of England will not increase its monetary stimulus further next week.
The Confederation of British Industry's distributive trades survey showed that the sales balance jumped to +30 from +6 in September. Analysts had forecast a reading of +7.
The expected sales balance for November stood at +27.
Sterling hit a session high against the dollar and gilt futures extended losses slightly after the data, as markets further pared back the chances of another round of quantitative easing purchases of government bonds.
The central bank is pinning big hopes on a new scheme which provides cheap funding to banks if they keep up or increase lending to households and companies.
BoE data showed on Tuesday that the number of lenders participating had increased to 30 by the end of October, and those banks represented some 80 percent of all lending at the end of June, which is the basis for the scheme.
Britain's retailers have already seen an unexpectedly strong September and the survey added to upbeat GDP figures last week, showing that Britain exited recession in the third quarter with quarterly growth of 1 percent.
"It is great news that last month's sales growth has continued into October at a much faster pace than expected and that this momentum is expected to continue next month, too," said Anna Leach, CBI head of economic analysis.
The CBI said the rise in sales volumes was driven by an increase in sales in clothing and furniture. Sales of durable household goods, meanwhile, were weak.
The government and the central bank are hoping that falling inflation and rising employment will allow Britons to increase spending and support the fragile economic recovery.
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