Finance

Sunny retail figures send the pound soaring through $1.30 for the first time since September

The pound has risen above $1.30 against the dollar for the first time since September after retail sales soared by 2.3 per cent in April.

In a boost for Prime Minister Theresa May before the election, the Office for National Statistics said sales were up by 4 per cent compared with April last year. The data also marked a steep improvement on the 1.4 per cent month-on-month fall in March.

The ONS said: It said: ‘Anecdotal evidence from retailers suggests that good weather contributed to growth.’

David Cheetham, chief markets analyst at XTB, added that the figures would ‘go some way to allay the fears of a slowdown in consumer spending following last month’s sharp drop’.

The pound jumped, rising 0.5 per cent to over $1.3043 and against the euro sterling was 0.9 per cent higher at €1.1723

The stronger-than-expected rise in sales pushed the value of the pound above $1.30, its highest level since September last year.

The pound rose 0.5 per cent to $1.3043, and against the euro sterling was 0.9 per cent higher at €1.1723.

The retail sales figures come a day after separate ONS figures indicated that wages were rising slower than inflation for first time since mid-2014.

Ben Brettell, senior economist at Hargreaves Lansdown, said: ‘Given yesterday’s news that real wages are now falling, today’s retail sales data was always going to be closely scrutinised.

‘The theory went that squeezed household budgets would likely hit retailers in the pocket too. But in fact the figures beat expectations handsomely, with sales in April 2.3 per cent higher than in March and growing 4 per cent year-on-year.

Relief: After yesterday’s inflation data, today’s sales figures will be welcomed by the Government

‘April’s figures were always expected to be better than March, because of the timing of the Easter holiday, but economists had forecast a smaller rebound of 1 per cent, and much more subdued annual growth of 2 per cent.’

Martin Beck, senior economic advisor to the EY ITEM Club, added: ‘April’s surge in retail sales was more than enough to compensate for the first quarter’s weakness, lifting the level of sales to the highest since last November.

‘Growth in volumes in April was broad-based, with non-store sales and purchases of household goods and food standing out, the latter two aided, the ONS suggested, by the month’s relatively warm weather. Clothing and department stores saw sales volumes dip.’

While holidaymakers are hoping the pound keeps rising before the summer, FTSE 100 investors will hope sterling cools.

This session the FTSE 100 has lost 100 points at 7,405.0, because most of its constituents make their profits abroad, meaning a rise in sterling dents their bottom line.

Connor Campbell at Spreadex said: ‘The FTSE’s slump has been home-grown. Retail sales allayed some of the pound’s fears surrounding the country’s rapidly rising prices – and shrinking real wages – and allowed the currency to post some hefty growth, a move that tends to be bad news for the FTSE.’

However there have been other factors in the FTSE 100’s demise this session, notably talk that US President Donald Trump may be impeached.

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