LONDON, Oct 22 (Reuters) - The British pound dipped slightly
on Friday after weaker-than-expected retail sales numbers but
remained close to recent highs after recent survey data and
policymaker comments underlined the threat of further
British sales volumes dropped by 0.2% in September, official
figures showed on Friday, bucking economists' expectations in a
Reuters poll for a monthly rise of 0.5%.
That miss coincided with more signs of rising inflation.
A record proportion of the British public thinks inflation
will accelerate over the next 12 months, according to data that
could further heighten anticipation that the Bank of England
will raise interest rates as soon as next month.
Some 48% of people surveyed this month by consumer research
firm GfK expected prices to increase more rapidly over the next
12 months, up from 34% in September.
The BoE's new chief economist, Huw Pill, said inflation in
Britain could surpass a "very uncomfortable" 5% and the question
of whether to raise interest rates would be a "live" one at its
Nov. 4 meeting, the Financial Times reported.
Sterling has risen - although not markedly - as traders in
recent weeks rushed to price in tighter monetary policy,
including an initial 15 basis points hike next month.
Investors say that makes the pound vulnerable should the BoE
disappoint expectations, or if rate increases slow economic
momentum just as supply chain disruptions and rising COVID-19
infection rates rattle confidence.
Against the euro the pound traded 0.2% lower at 84.49 pence
, still close to levels last seen in February 2020
before the pandemic sparked widespread selling of sterling.
"One argument is that (the BoE) waiting until December would
provide time to assess the labour market following the end of
the furlough scheme. Weak data like todays could also sway some
to hold off," said MUFG analyst Derek Halpenny.
"Well stick with November for now but the important point
to make here is that the pricing in the market on BoE rate hike
action going forward is still excessive and we believe incoming
data will adjust lower those expectations, even if the BoE does
go by 15bps on 4th November. That, in our view, leaves the pound
vulnerable to a correction lower."
(Reporting by Tommy Wilkes
Editing by Mark Heinrich)