GBP Strengthens Following Mixed U.K. Data

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The British pound inched up against the U.S. dollar on Friday.

The gains, however, are expected to remain limited following the release of mixed U.K. economic data, while continuing demand for the greenback will likewise keep gains at modest levels.

GBP/USD trading reached 1.4306 in early European session, the highest in 3 days, but eventually consolidated at 1.4284, inching up 0.46%.

Economic data coming out of the U.K. show retail sales declined by 1.0% last month.  Year-on-year, December figures rose by 2.6% but is still way below expectations of 4.3% gain.

Core retail sales fell by 0.9% in December while public sector borrowing rose by £6.87 billion, down from projections of £10.35 billion. Net borrowing climbed by £12.94 billion in November, which was already revised from a previously estimated gain of £13.56 billion.

Meanwhile, the greenback continued to consolidate support due to the difference in monetary policies between the Federal Reserve and the European Central Bank (ECB).

The U.S. dollar gained broadly after ECB President Mario Draghi said on Thursday that they will be reviewing and reconsidering their policy when new economic projections become available in their upcoming meeting in March.

The sterling likewise gained against the Euro, with Euro/GBP declining 0.73% to 0.7590.  Meanwhile, GBP/CAD is at a 12-month high at at 2.022 as crude oil prices continue to pound the Canadian currency.

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