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Pound jumps on retail resurgence and Brexit hopes

Pound jumps more than 1% against a falling dollar as August UK retail sales beat forecasts and investors pin hopes on Brexit deal.

Pound jumps on retail resurgence and Brexit hopes
 

The pound has jumped more than 1% against the dollar and approached the $1.33 mark after forecast-beating UK retail sales in August.

Sterling was up 1.1% against the greenback at $1.328, having risen as high as $1.329 earlier in the session. That rise was boosted by dollar weakness, with the greenback falling against a global basket of currencies, as fears over global trade wars waned. 

The Office for National Statistics reported a 3.3% jump in retail sales in August compared to a month ago. Month-on-month, sales were up 0.3% on July's strong figures, defying expectations of a 0.2% fall.

Paul Mumford, Citywire AA-rated manager of the Cavendish AIM and Opportunities funds, who is an enthusiastic backer of UK high street retailers, said the data countered fears Brexit uncertainty would weigh on sales.

'Today's recent retail sales figures tell a different story,' he said. 'If consumers are worried about the ongoing negotiations it has certainly not been reflected in their spending.'

But he acknowledged the 'headwinds' that remained for consumers, 'with petrol prices at the pump and inflation creeping up meaning that consumers haven't been splashing the cash in every area of the sector - clothing and food in particular have felt the effects of this'.

Investors were also buoyed by comments from Cabinet Office minister David Lidington that the UK government was close to a Brexit deal.

'The withdrawal agreement - we're 85%... 90% of the way to fixing the text,' he told Irish radio.

The FTSE 100 meanwhile rose 16 points, or 0.2%, to 7,347, despite the pound's rise. A rallying pound tends to weigh on the index as its stocks rely on overseas markets for around three-quarters of their earnings.

But the big movers were to be found outside the FTSE 250. Games Workshop (GAW) rose to the top of the 'mid-cap' index, up 6.8% to £37.95 after meeting forecasts in its trading update.

IG Group (IGG) was down 7.2% at 801.5p as the trading platform announced a 4.7% fall in revenues, hurt by a European clampdown on high-risk betting.

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