British retail sales picked up more than forecast in October, a survey showed today, boosting recovery hopes after last week's growth data showed the country had leapt from recession.
The survey among retailers also added to views that the Bank of England will not increase stimulus next week, in particular as the BoE's scheme providing cheap funds to banks drew in most of Britain's lenders, clearing the way for easier credit.
The Confederation of British Industry's distributive trades survey showed that the sales balance jumped to +30 from +6 in September, far above analysts' forecasts for +7.
Sterling hit a session high against the dollar and gilt futures extended losses after the data, as markets further pared back the chances of another round of quantitative easing purchases of government bonds.
"Given the key role of consumer spending, the survey provides a significant boost to hopes that the economy can keep growing in the fourth quarter following the better-than-expected third quarter GDP rebound," said IHS Global Insight economist Howard Archer.
"However, it remains to be seen if consumers will sustain their recent improved spending, given that they still face significant headwinds and consumer price inflation could well move back up in the near term," he added.
A monthly survey by the European Union showed that British consumer confidence fell to the lowest level since May.
Eonomists at RBS however became the latest in a string of BoE watchers to change their forecast for the central bank's decision at November 8.
"There appears to be a waning enthusiasm among BoE policymakers for further QE gilt purchases, and recent data alleviate some of the near-term pressure," RBS economist Ross Walker said in a note.
Reuters
