Investing.com - The pound rose to the day’s highs on Thursday after data showing that UK retail sales outstripped forecasts in May as good weather and the Royal Wedding boosted consumer spending.
GBP/USD was up 0.49% to 1.3442 by 05:03 AM ET (09:03 AM GMT), from around 1.3396 ahead of the report.
UK retail sales jumped by a far larger-than-expected 1.3% in May, the Office for National Statistics said, while the figure for the previous month was revised up show a 1.8% increase.
Shoppers spent more on food and household goods in the run-up to the wedding of Prince Harry and Meghan Markle during the good weather in the middle of the month, the ONS said.
The report indicated that the economy is recovering from a sharp slowdown seen amid adverse weather conditions in the early part of the year.
The pound’s gains came as the U.S. dollar weakened across the board, giving up gains made in the previous session after a more hawkish sounding Federal Reserve raised interest rates for the second time this year and indicated that it now sees two more rate increases before the years end.
The Fed described the U.S. jobs market as “strong” and said economic activity had been rising at “a solid rate”.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was down 0.29% to 93.29.
Investors remained cautious as the Trump administration prepared to unveil $50bn worth of tariffs on Chinese goods – a move that Beijing has also warned will be met with retaliatory action.
Sterling was also higher against the euro, with EUR/GBP sliding 0.25% to 0.8794 as investors awaited the conclusion of the European Central Bank’s policy meeting later in the day.
Market participants were awaiting details on the ECB’s plans for winding up its huge bond-buying stimulus program. The central bank will also release its latest growth and inflation projections.