The sterling hit one-month high against the dollar on Thursday, after UK retail sales data came in much higher than expected.
British retail sales volumes in February rose by 1.4% from January, beating the 0.4% increase forecast by a Reuters poll of economists and following three consecutive monthly declines.
For the three months to February, this was still the biggest slide for retail sales in nearly seven years as higher fuel prices eroded shoppers’ disposable income.
Sterling has lost nearly a fifth of its value since the EU referendum in June, contributing to a spike in domestic inflation which has further weighed on previously robust consumer spending which then propped up the UK economy.
A number of major banks have warned in the past month that sterling could fall below $1.20 as public jousting with Brussels on the terms of Britain’s departure from the EU gets going after the launch of talks next month.