LONDON: Sterling cut losses against the dollar and hit a day's high against the euro on Wednesday after British retail sales beat expectations in October, offering relief to a currency that has struggled in the past few weeks.
British retail sales volumes rose 0.8 percent on the month after a fall of 0.4 percent in September, easily beating expectations of a 0.3 percent rise. For the year, retail sales rose 4.3 percent.
Sterling rose to $1.5684, having traded at $1.5648 before the data was released. The euro fell 0.3 percent to a day's low of 79.75 pence from 79.93 pence beforehand.
Traders cited option barriers at $1.57 which could check sterling's gains against the dollar.
"This data is unlikely to change the market's expectations for a rate hike, which vary between third quarter of 2015 and first quarter of 2016," said Alex Edwards, head of the corporate desk at UKForex.
"We'll need to see strong data over the next couple of months for markets to change their views on interest rates."
Sterling hit a 14-month low of $1.5593 last Friday as investors pushed back expectations of when British interest rates would rise after the BoE said inflation could fall below 1 percent in the next six months.
Investors are now factoring in a rate rise in the second half of next year, with rate and swap markets along with short sterling futures only pricing in a 25 basis point move in the final quarter.
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