Pound Rebounds As U.K. Retail Sales Rises More-than-Expected

The British pound recovered from recent highs against other major currencies in the early European session on Thursday, after data showed that U.K. retail sales recovered at a faster than expected pace in June.

Data from the Office for National Statistics showed that U.K. retail sales grew 0.6 percent month-on-month in June, reversing a 1.1 percent fall in May. Sales were forecast to gain 0.4 percent.

Excluding auto fuel, retail sales climbed climbed 0.9 percent, in contrast to a 1.5 percent decrease in the previous month. Economists had forecast a 0.5 percent increase.

On a yearly basis, retail sales growth accelerated to 2.9 percent in June from 0.9 percent a month ago. This was also faster than the expected 2.5 percent.

Likewise, sales volume excluding auto fuel improved to 3 percent from 0.6 percent. Sales were forecast to grow 2.5 percent.

Meanwhile, European stock markets traded higher after the Bank of Japan kept its monetary stimulus intact and sounded more upbeat about the economy, but downgraded its outlook for inflation. Investors braced for the European Central Bank's rate decision and President Mario Draghi's press conference for clues as to whether the central bank will begin paring stimulus measures.

In the Asian trading today, the pound held steady against its major rivals.

In the early European trading, the pound rose to 0.8833 against the euro and 1.2458 against the Swiss franc, from an early 2-day lows of 0.8866 and 1.2411, respectively. If the pound extends its uptrend, it is likely to find resistance around 0.87 against the euro and 1.27 against the franc.

Against the yen, the pound advanced to 146.27 from an early low of 145.57. The pound may test resistance around the 148.00 region.

The pound edged up to 1.3017 against the U.S. dollar, from an early 6-day low of 1.2972. On the upside, 1.31 is seen as the next resistance level for the pound.

Looking ahead, the European Central Bank is set to announce its interest rate decision at 7:45 am ET. The bank is expected to keep its refi rate at zero percent and the deposit rate at -0.4 percent. The announcement will be followed by a press conference at 8:30 am ET.

In the New York session, U.S. weekly jobless claims for the week ended July 15, U.S. leading indicators for June, U.S. Federal Reserve Bank of Philadelphia's manufacturing index for July, and Eurozone consumer confidence index for July are slated for release.