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British Pound Gains as Retail Sales Expands & Inflation May Rise

December 16, 2010 at 20:39 by Vladimir Vyun

Great Britain poundThe Great Britain pound jumped today after the reports showed that Britain’s retail sales expanded and the UK consumer inflation expectations increased, suggesting that Britain’s economy performs not that bad.

The retail sales volume increased by 0.3 percent between October and November, following the 0.7 percent growth in October from September. The Bank of England/GfK NOP Inflation Attitudes Survey showed that the median expectations for the rate of the inflation over the coming year were 3.9 percent in November, compared with 3.4 percent in August. The PPI and CPI reports this week were also positive.

Adam Posen, the member of the Monetary Policy Committee, cautioned against overreacting to the inflation, which may slow below 1 percent in two years, saying that the MPC “would only make things worse by making policy looking in the rear-view mirror, trying to make up for past mistakes”. He also said: “If we allow for even just some exchange-rate pressure upwards on prices over this period as well, underlying U.K. inflation has stayed well below target.”

GBP/USD jumped from 1.5543 to 1.5610 today as of 18:39 GMT, following the advance to the intraday high of 1.5630. GBP/JPY traded at 131.44, rising from the opening level of 130.93. The currency pair reached the intraday high of 131.63 earlier.

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