UK retail sales rose by 0.3 percent on the month, confounding forecasts for a fall of 0.1 percent, while sales for the previous month were revised up significantly.
Sterling rose to a session high of $1.5708 from around $1.5668 before the data, taking it closer to a peak of $1.5730 reached earlier this week. Before the figures, the pound had been buoyed by reported buying by an Asian central bank.
The euro fell to 78.165 pence, its lowest in more than two weeks, from around 78.32 pence beforehand.
September gilt futures fell from levels of around 119.80 before the data to as low as 119.66 immediately afterwards, close to a six-week low of 119.62 set early in the session. At 0834 GMT the future was 10 ticks down on the day at 119.69.