LONDON: Sterling struggled along with other major currencies against the dollar on Thursday but gained ground on the euro as a surge in pre-Christmas retail sales in November underlined a relatively stronger UK economic outlook.
The pound has been buffetted for weeks by a combination of worries over the 'Brexit' debate over whether the UK should leave the European Union and fading conviction that the Bank of England will follow the U.S. Federal Reserve's lead and raise interest rates next year.
The dollar gained against all of the major currency pairs after the Fed hiked for the first time in a decade on Wednesday and, aside from a brief blip after the retail sales numbers, sterling was also lower.
"The retail sales data are undeniably strong so it is quite interesting that sterling hasn't been able to capitalise more," said Hamish Pepper, a currency strategist with Barclays in London.
"Overall, you would have to say that the rest of the recent data from the UK hasn't been spectacular at all and there is no significant pressure on the Bank of England to move. You probably need a lot more of readings like today's for the market to change its tune."
Sterling touched highs for the day above $1.50 before retreating to stand around a quarter of a percent lower on the day at $1.4952. It was up 0.3 percent at 72.57 pence per euro, having hit a high of 72.55 pence immediately after the data.
While Britain's economy has grown robustly over the past year, there is still little evidence of the sort of pressure on prices that would force policymakers to tighten monetary policy.
Data on Wednesday showed average earnings grew at the slowest pace since early this year in the three months to October, even though strong job creation pushed down the unemployment rate.
Still, seasonally-adjusted retail sales volumes in November alone jumped by 1.7 percent from October - more than triple the 0.5 percent rise forecast in a Reuters poll - and sales on the year were 5 percent higher, also well above expectations.
"The retail data is encouraging and the pound surged across the board on the release," said Neil Jones, Head of Financial Institutional Sales at Mizuho Bank in London.
"But I doubt gains against the dollar can be sustained today."
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