LONDON: The pound slipped versus a stronger dollar on Friday but was still on track for weekly gains versus both dollar and euro, helped by data releases reinforcing market expectations for a strong economic recovery in the United Kingdom.
A preliminary reading of UK PMI data for May hit its highest level on record, with hotels, restaurants and other previously-closed customer services seeing the strongest jump in demand.
Earlier in the session, separate data showed British retail sales surged in April. Sales volumes jumped by 9.2% month-on-month - twice the average forecast in a Reuters poll of economists.
Sterling did not move substantially on the news, but strengthened throughout the morning session, reaching as high as $1.2330 before slipping later as the dollar strengthened. At 1446 GMT, it was down 0.2% on the day at $1.4165, set for a weekly gain of around 0.5%.
Versus the euro, it was up 0.3% at 85.98 pence per euro, on track for its fourth consecutive weekly gain.
Sterling rose above the key $1.42 level on Tuesday for the first time since February, boosted by a combination of dollar weakness and bets on a faster UK economic recovery.
Britain took a significant step towards lockdown-easing on Monday, with a ban on international travel lifted and restaurants allowed to reopen for indoor service.
Neil Jones, head of FX sales at Mizuho, said the UK economic recovery is partially priced in to the pound, but not fully because there is no clear precedent for how much vaccines will allow the economy to reopen or what the impact will be on GDP. Jones expects cable to reach $1.45 in the summer.
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