Surge in UK Consumer Spending Boosts Pound Amid Economic Reassurance

The UK pound saw a rally of up to 0.5% as consumer spending showed unexpected strength last month. Despite looming concerns over upcoming government budget adjustments, retail sales in September outperformed forecasts. The data spurs cautious optimism towards economic resilience, reflecting in the pound's performance.

The British pound rallied significantly on Friday amid unexpected data showing robust consumer spending in the UK last month. This offers some reassurance about the economy's underlying strength, although the pound remains poised for its third consecutive weekly drop.

Official data revealed a surprising 0.3% rise in British retail sales for September, contradicting expectations of a fall. This rise challenges prevailing consumer sentiment, which has been wary of potential tax increases in the government's upcoming budget.

Despite the pound's strong performance, the Bank of England is anticipated to proceed with careful rate cuts, especially since inflation remains more persistent than in the United States. The pound has emerged as the strongest-performing currency against the dollar this year, with gains contrasting with losses in the euro and yen.

(With inputs from agencies.)