Today's European session focus data focused on the publication of UK retail sales data which declined significantly in January due to the fact that many non-essential stores were closed to curb the spread of Covid-19.
The National Statistics Office (ONS) reported a drop of 8.2% last month, far above expectations of a 2.% decline. This decline is also the second largest after the fall in April 2020, at the beginning of the epidemic.
The pound, however, failed to react to this weak reading, but jumped higher to reach the price level of 1.4000 against the US dollar in the European session, the highest in almost 3 years.
Apart from retail sales data, market focus is also focused on UK PMI data which shows encouraging readings. The UK manufacturing and services sectors each recorded growth exceeding market expectations.
Although still recording a contraction, which is below the reading of 50, UK business activity is seen to be higher than previous readings and market projections.
This encouraging reading has further strengthened the pound currency trading and pushed it higher, which had previously been supported by the weakness of the USD.
Meanwhile, the market was also seen with the release of PMI data, where business activity in the European Zone continued to be affected by tighter coronavirus restrictions causing it to record a contraction for the sixth consecutive month.
However, this situation is different from European manufacturing activity which recorded a stronger-than-expected recovery, rising to its highest level since February 2018. This increase was driven by strong demand for manufactured goods.
