Sterling rises, shrugs off unexpected weaker August sales data

LONDON: Sterling rose on Tuesday as the dollar slipped and investors shrugged off an unexpected drop in Britain's monthly retail sales data.

The dollar fell after investors returned to riskier currencies as a successful phone call between top trade officials in the United States and China boosted positive sentiment.

Sterling was last up 0.4% at $1.3122 versus the greenback . It was little changed at 90.195 pence versus the euro .

"It's much more about general risk sentiment and I think that's why sterling is doing well this morning," said Morten Lund, an analyst at Nordea Markets. "We also have a weaker dollar that has to some extent helped sterling."

The pound rose in spite of the monthly retail sales balance falling to minus 6 in August, according to data from the Confederation of British Industry (CBI), far below forecasts in a Reuters poll of economists which had predicted plus 8.

A note from ING analysts had earlier said the data, which also revealed job changes sank to their lowest since February 2009, could lead to a temporary boost for the pound.

International central bankers, Federal Reserve officials, academics and some private sector analysts will meet virtually on Thursday and Friday because of the COVID-19 pandemic, instead of in the mountain resort of Jackson Hole, Wyoming.

"The whole approach has been mostly wait and see ahead of the Jackson Hole symposium," said Francesco Pesole, FX strategist at ING.

Sterling still has to grapple with ongoing Brexit negotiations between Britain and the European Union, which are far from reaching a consensus.

UK public debt also rose above 2 trillion pounds ($2.7 trillion) for the first time last month as the coronavirus pandemic prompted the government to ramp up public spending.