Date: Friday 18 Jun 2010
The pound neared a one-month high against the dollar following much stronger than expected UK retail sales data and an increased appetite for risk after a successful the Spanish bond auction.Downbeat economic data out of the US also torpedoed the greenback, with first-time jobless claims up 12,000 last week and manufacturing activity in the Philadelphia region on the decline.
Buyers snapped up the euro after Spain saw good results for its bond auctions, easing concerns the country might suffer the same fate as Greece. It sold almost €3.5bn of 10 and 30-year bonds.
That also soothed fears that the Spanish were in talks over a potential record-breaking bailout.
UK retail sales attracted lots of attention. They were 0.6% higher than in April and up 2.2% on the same time last year, according to the Office for National Statistics, as consumers spent May feathering their nests with new TVs and food in time for the World Cup.
Economists had been looking for looking for a 0.1% monthly increase and 2% year-on-year rise, but hadn’t banked on a 1.7% increase in household goods sales following a surge in demand for flat-screen televisions.
Howard Archer, chief UK economist at IHS Global Insight, said the “perky” sales in May will help consumer spending, which accounts for about 65% of GDP, make a decent contribution to UK growth in the second quarter.
Comments by Bank of England Governor Mervyn King at Wednesday’s Mansion House speech indicated that the MPC was in no hurry to raise interest rates, despite the current high level of inflation, and fully supported the Governments plans for fiscal consolidation. That had caused a fall in sterling early Thursday. 
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