Sterling soars to 14-month high

Sterling rose to its highest in 14 months against a trade-weighted basket of currencies on Wednesday, bolstered by improving UK data, while the pound held near a three-month high against the euro. Worries about the eurozone debt crisis took centre-stage as Spanish 10-year bond yields remained high, prompting investors to switch to the UK currency which is still considered relatively safe in comparison to the common currency.
The pound was supported by data that showed British retail sales rose in March at their fastest pace so far this year. The British Retail Consortium said like-for-like retail sales rose by an annual 1.3 percent in value terms, easily beating expectations of a stagnant performance.
That came a day after figures showed UK house prices declining at their slowest pace since June 2010 in March. All of this added to signs that the UK economy was slowly recovering and the Bank of England would not have to resort to more monetary easing. "We have had some better UK data today, yesterday and the past week, giving reason for sterling outperformance," said Jane Foley, senior currency strategist at Rabobank.
On a trade-weighted basis, the pound rose as high as 82.3, its strongest since mid-February 2011, Bank of England data showed, before easing to 82.2. If it rises to 82.4, the index would have risen to its highest level since August 2010. The euro was subdued at 82.50 pence, not far from 82.30, its lowest level since early January, with strong support seen around the January 9 low of 82.22 pence. Traders said a UK bank bought euros earlier in the session with a reported option barrier at 82 pence likely to check losses for now.
Analysts are said sterling was also benefiting from safe haven-related flows from the Middle East and this was likely to help it against the euro. Against the dollar, sterling was up 0.2 percent at $1.5910 with near-term resistance at $1.5934, the 50 percent retracement of its fall from $1.6063 on April 2 to a low of $1.5805 on April 5.