The pound rose against the dollar on Friday after data revealed U.K. retail sales came in much stronger in December than expected.

In U.S. trading on Friday, GBP/USD was trading at 1.6420, up 0.41%, up from a session low of 1.6310 and off a high of 1.6458.

Cable was likely to find support at 1.6310, the earlier low, and resistance at 1.6508, Monday''s high.

The pound firmed after official data revealed that U.K. retail sales increased by 2.6% in December, far more than the expected 0.4% rise. Retail sales in November were revised down to a 0.1% rise from a previously estimated 0.3% gain.

Meanwhile in the U.S., the preliminary Thomson Reuters/University of Michigan consumer sentiment index fell to 80.4 in January from 82.5 in December, defying expectations for a rise to 83.5.

Separately, official data showed that U.S. building permits declined 3% to 986,000 million units in December from 1.017 million units the previous month. Analysts had expected building permits to slip to 1.015 million units last month.

Data also showed that U.S. housing starts rose dropped 9.8% and came in at 999,000 units in December from an upwardly revised 1.107 million units in November.

Markets were expecting see 990,000 in new housing starts, and the better-than-expected figure gave the dollar some support by suggesting fundamental improvements are taking place in the U.S. housing sector.

Sterling was higher against the euro, with EUR/GBP down 1.07% to 0.8240, and up against the yen, with GBP/JPY up 0.34% as 171.24.

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