Sterling rises on positive economic data
Sterling rose to a near year high against the euro yesterday following positive data on UK house prices and retail sales.
This morning sterling was worth $1.8860, 1.4831 and 221.8300 yen, strengthening on yesterday's reports from the Royal Institute of Chartered Surveyors (Rics) and the Office for National Statistics (ONS), which further raised expectations of an interest rate rise.
ONS figures showed retail sales rose 0.3 per cent from July to August, meeting analysts' expectations and prompted by cooler weather and rising house prices.
"Retail sales recovered as expected in August and the underlying trend remains broadly healthy, indicating that the interest rate at the beginning of the month did not have an immediate major dampening impact on the consumer," said Howard Archer, chief UK and European economist of Global Insight.
"Overall, the retail sales data are likely to sustain expectations of a November interest rate hike."
Expectations of a rate rise were also strengthened by a report from Rics which showed house prices rose at their fastest rate in more than two years.
House prices increased for the fifth successive month in August and buyer inquiries rose faster in the month than at any time since September 2003.
"Last week's interest rate freeze will mean that the housing market will maintain its current positive momentum," said Rics spokesman Ian Perry.