Investing.com - The pound edged higher against the dollar on Monday as Friday’s stronger-than-expected U.K. retail sales numbers for December bolstered the outlook on the economic recovery.
GBP/USD hit session highs of 1.6453 during European morning trade, and was last up 0.12% to 1.6440.
Cable is likely to find support at 1.6350 and resistance at 1.6515, the high of January 10.
Demand for sterling continued to be underpinned after data on Friday showed that U.K. retail sales jumped 2.6% in December from a month earlier and were 5.3% higher on a year-over-year basis.
Analysts had expected a monthly increase of 0.4% and an annual gain of 2.6%.
The strong data reinforced the view that the economic recovery will continue to deepen going into this year and fuelled expectations that the Bank of England may raise interest rates ahead of other central banks.
Sterling’s gains were held in check after recent U.S. data added to the view that the U.S. economic recovery is strong enough for the Federal Reserve to make further reductions to its asset purchase program at its policy meeting later this month.
Elsewhere, the euro was trading close to one-year lows against the pound. EUR/USD touched lows of 0.8233, and was last down 0.04% to 0.8242, near the 12-month low of 0.8229 struck on January 9.
The euro remained under pressure amid concerns that the subdued inflation outlook for the euro zone may prompt the European Central Bank to ease monetary policy further in order to safeguard the fragile recovery in the region.