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Pound gains further after positive Retail Sales

• Posted by Shyam Gokani in Bank of England, Brexit, Currency, Dollar, Economy, EUR, GBP, Mark Carney, Sterling, UK
• May 19, 2016
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British retail sales bounced back much more strongly than expected in April, despite cold weather dealing a big blow to spring clothing sales compared with last year, official figures showed this morning.

Retail sales volumes rose 1.3 percent on the month in April, the Office for National Statistics said, well above economists’ average forecast of 0.5 percent growth.

The ONS also significantly revised March’s figures, showing retail sales fell just 0.5 percent on the month, a much smaller decline than the 1.3 percent drop it had previously estimated, due to more late data than normal from some large stores.

Compared with a year earlier, sales volumes were up 4.3 percent, beating all forecasts in a poll.

Sterling eased against a strong dollar today, giving up some of its gains from yesterday, when a poll showed support was growing for Britain to remain a member of the European Union.

The dollar was higher against most major currencies after the minutes of the Federal Reserve’s April meeting rekindled expectations the Fed would raise U.S. interest rates in June.

Sterling had soared on Wednesday after the Ipsos-Mori poll, found 55 percent of those surveyed supported staying in the EU and just 37 percent wanted to leave. Earlier, a YouGov poll showed the “In” camp with a four-point lead.

Worries about a possible Brexit have weighed on the pound since late last year, driving an 8 percent decline in the past six months on a trade-weighted basis. But since hitting a 2 1/2-year low last month, sterling has recovered by almost 4 percent.