Investing.com - The pound was near the day’s highs on Thursday after data showing that UK retail sales rose at a far faster pace than expected last month as investors awaited the outcome of the Bank of England’s monetary policy meeting later in the day.
GBP/USD was up 0.25% to 1.3452 by 03:40 AM ET (08:40 AM GMT) from around 1.3447 earlier.
Retail sales jumped 1.1% in November, up from 0.5% in October and well ahead of economists' forecasts of a 0.4% rise, the Office for National Statistics reported.
Retail sales volumes were 1.6% higher than a year earlier, up from a flat reading in October.
Sales were boosted as shoppers took advantage of Black Friday bargains but the report also indicated that the underlying trend was weaker.
Sales in the three months to November grew by just 1.0% compared with a year earlier, the weakest since May 2013.
The report also pointed to rising inflation pressures, with average shop prices up 3.1% in November from a year earlier.
The fall in the pound since last year’s Brexit vote has fueled inflation by pushing up the cost of imported goods. With inflation outstripping wage growth pressure on household spending is likely to worsen which could dampen growth.
Investors were looking ahead to the BoE announcement later Thursday, with no change expected after a rate hike last month. Instead investors will be focusing on the meeting minutes for hints of further action in 2018 and the bank’s view on Brexit.
The Federal Reserve raised interest rates as expected at its meeting on Wednesday and left its interest rate projections for 2018 unchanged.
Meanwhile, sterling was higher against the euro, with EUR/GBP down 0.31% at 0.8789.
In the euro zone, data on Thursday showed that the economy picked up further momentum in at the end of 2017, with December seeing the fastest growth in business activity in almost seven years.
The European Central Bank was expected to keep rates on hold following its meeting later Thursday, with investors awaiting any fresh forward guidance from ECB chief Mario Draghi on the bank's bond buying program.