Pound Rises On Strong UK Retail Sales Data

(RTTNews) - The British pound strengthened against other major currencies in the pre-European session on Friday, after data showed that the nation's retail sales rose more-than-expected in November.

Data from the Office for National Statistics showed that the British retail sales advanced 1.3 percent on month in November following a revised nil growth in October. Excluding auto fuel, retail sales growth accelerated to 1.3 percent from 0.2 percent.

Driven by earlier Black Friday sales and wider discounting, non-food store sales advanced 2.3 percent. Food store sales moved up 0.8 percent. Automotive fuel sales gained 0.6 percent as fuel prices fell. The contribution of non-store retailing rounded to zero, data showed.

On a yearly basis, retail sales posted a marginal growth of 0.1 percent, reversing a 2.5 percent decrease in October. Excluding auto fuel, retail sales gained 0.3 percent, in contrast to the 2.1 percent drop a month ago.

The ONS also reported that the UK economy contracted in the third quarter due to the fall in the service sector. Gross domestic product shrank 0.1 percent sequentially in the third quarter, which was revised down from the flat growth estimated initially.

In output terms, data showed that there was a 0.2 percent drop in the services sector, which offset a 0.4 percent rise in construction output and a 0.1 percent gain in the production sector.

Another data from the ONS showed that the current account deficit narrowed to GBP 17.18 billion in the third quarter from GBP 23.96 billion in the second quarter.

In the Asian session today, the sterling held steady against its major rivals.

In the pre-European trading, the pound rose to a 2-day high of 1.2715 against the U.S. dollar, from yesterday's closing value of 1.2688. If the pound extends its uptrend, it is likely to find resistance around the 1.28 region.

Against the euro, the Swiss franc and the yen, the pound advanced to 0.8650, 1.0895 and 180.96 from yesterday's closing quotes of 0.8673, 1.0862 and 180.30, respectively. On the upside, 0.85 against the euro, 1.10 against the franc and 185.00 against the yen are seen as the next resistance level for the pound.

Looking ahead, Canada GDP data for November, Canada budget balance report for October, Canada manufacturing and wholesale sales for November and U.S. building permits for November, U.S. durable goods order for November, personal income and spending data for November, U.S. University of Michigan consumer sentiment for November and U.S. Baker Hughes oil rig count data are slated for release in the New York session.