"Although the intensity of the squeeze from inflation has eased somewhat in recent months, nominal wage growth has deteriorated leading to an acceleration in real earnings falls"
- Blerina Uruci, an economist at Barclays Plc
The cable hit 1.626 on October 1, the level which is the highest since January 2013; however, later the pair eased back to 1.60. Nevertheless, this move looks like a correction, as the Pound is already recovering versus the greenback on Thursday advanced more than 100 pips on the back of another portion of upbeat data from Britain. Even the last-minute budget deal in the United States was not able to push the pair significantly lower. On Thursday the ONS said that sales at Britain's retailers advanced 0.6% in September, from a month earlier, when they plunged 0.8% and 0.2% higher than the median forecast made by analysts. The main contributors to growth came from sales of household-goods, which advanced 3%, while the main downside pressure came from a 0.2% decline in food-store sales. On an annual basis sales rocketed 2.2% over the same period, while core retail, which excludes fuel, inched up 0.7%. Taking into account recent strength in British economy, another upside movement in recent high's direction can be expected.
Stronger-than-expected reading is interpreted as an indicator of the wider economy and the strength of consumer spending. Retail sales can be volatile from month to month due to many factors; however, the fact that data came highly above the forecasts are reinforcing a view the economy is on the path of sustain recovery.
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