2019.02.1506:57:00UTC+00Pound Spikes Up After Stronger-than-expected U.K. Retail Sales Data

The pound strengthened against its major opponents in the European session on Friday, as UK retail sales rebounded strongly at the start of the year, rising at a faster-than-expected pace, led by robust clothing and footwear sales supported by price cuts.

Data from the Office for National Statistics showed that retail sales including auto fuel rose 1 percent from December, when they decreased 0.7 percent. Economists had expected a 0.2 percent gain.

On a year-on-year basis, retail sales including auto fuel rose 4.2 percent in January, which was the biggest increase since December 2016.

Economists had expected sales growth to rise modestly to 3.4 percent from December's 3.1 percent increase.

Excluding auto fuel, retail sales climbed 1.2 percent monthly reversing a 1 percent slump in December. Economists had forecast a modest 0.2 percent gain.

Compared to a year ago, retail sales excluding auto fuel grew 4.1 percent in January after a 2.9 percent increase in December. That was the fastest increase in six months. Economists had forecast 3.2 percent gain.

European stocks were higher amid trade optimism, as the US trade secretary Steven Mnuchin announced that he had held "productive" trade negotiations with Chinese delegation in Beijing.

Investors shrugged off political uncertainty in Spain, where Prime Minister Pedro S?nchez has called for a snap general election in April, two days after his minority Socialist government suffered a major defeat in Parliament.

The currency has been trading higher against its major counterparts in the Asian session, barring the yen.

The pound appreciated to 141.67 against the yen, from more than a 3-week low of 141.01 seen at 3:30 am ET. Next key resistance for the pound is likely seen around the 143.00 level.

After dropping to 1.2855 against the franc at 5:15 pm ET, the pound reversed direction and advanced to 1.2913. The pound is seen finding resistance around the 1.31 mark.

Following a decline to 1.2785 at 3:30 am ET, the pound recovered and reached as high as 1.2830 versus the greenback. On the upside, 1.31 is possibly seen as the next resistance level for the pound.

The pound edged up to 0.8788 against the euro, following a fall to 0.8828 at 8:00 pm ET. Further uptrend is likely to take the pound to a resistance around the 0.86 level.

Figures from the statistical office Eurostat showed that Eurozone's merchandise trade surplus came in below economists' expectations for December.

The seasonally adjusted trade surplus fell to EUR 15.6 billion from EUR 15.8 billion in November. Economists had expected a surplus of EUR 16.3 billion.

Looking ahead, Canada existing home sales for January, U.S. export and import prices and industrial production for the same month, New York Fed's empire manufacturing survey and University of Michigan's preliminary consumer sentiment index for February are slated for release in the New York session.