Forex - GBP/USD hits 3-week highs on U.K. retail sales data

Shutterstock photo - The pound rose to a three-week high against the dollar on Thursday after official data showed that U.K. retail sales jumped in February and the country's public sector borrowing was smaller-than-expected.

GBP/USD hit 1.5205 during European morning trade, the pair's highest since February 27; the pair subsequently consolidated at 1.5170, gaining 0.48%.

The pair was likely to find support at 1.5087, the session low and resistance at 1.5272, the high of February 21.

The Office for National Statistics said U.K. retail sales rose by a seasonally adjusted 2.1% in February, blowing past expectations for a 0.5% increase, and the strongest increase since March 2012.

Retail sales rose 2.6% year-on-year, easily surpassing expectations for a 0.5% increase.

Core retail sales, which exclude automobile sales, rose 1.9% in February, beating expectations for a 0.6% gain.

Retail sales for January were revised down to a 0.7% decline from a previously reported fall of 0.6%.

A separate report showed that public sector borrowing came to GBP2.8 billion in February, GBP9.0 billion lower than the same month last year, when net borrowing was GBP11.8 billion.

Elsewhere, the European Central Bank announced that it will continue to supply emergency funding to Cyprus's banks until next Monday. The ECB said that further funding would only be considered if an agreement with the European Union and the International Monetary Fund on a bailout is in place.

Sterling was higher against the euro, with EUR/GBP down 0.69% to 0.8506.

The euro fell to session lows after data showed that manufacturing activity in the euro zone deteriorated to a three-month low in March.

The euro zone manufacturing purchasing managers' index fell to a seasonally adjusted 46.6 in March from 47.9 in February, compared to expectations for a reading of 48.2.

The euro zone services PMI fell to a five-month low of 46.5 from 47.9 in March.

Germany's manufacturing PMI fell to 48.9 in March from 50.3 the previous month and the country's services sector expanded at the slowest rate in four months.

The U.S. was to release the weekly government report on initial jobless claims, as well as industry data on existing home sales and official data on manufacturing activity in Philadelphia later Thursday. - offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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