The pound gave up its gains of Friday after worse-than-expected retail sales data added to the probability of an interest rate cut. The pound fell 0.4% against the dollar but was more stable against the euro. When combined with weak growth numbers last Wednesday and slower manufacturing production data on last Monday, the probability of a rate cut is quoted at 70% by some analysts.

The pound was still stronger on Friday than it was earlier in the week as investors have some increased hopes that a trade deal will be negotiated between the EU and the UK before the end of the year. Prime Minister Boris Johnson said this was very likely.

GBPUSD opened at 1.3078 and reached an early morning high of 1.3112 before dropping across the rest of the day to close at 1.3029

GBPEUR opened at 1.1744 and performed similarly, reaching a high of 1.1778 but dropped down to close at 1.1745, almost unchanged on the day

The dollar rose to a one-week high again the euro on Friday after positive data showed strong economic growth. Homebuilding in the US jumped to a 13-year high in December and retail sales data on Thursday showed sales had increased for the third consecutive month in December. Investors fearing a slowdown had reason to feel optimistic as stock indexes made gains.

The euro fell 0.41% against the dollar whilst the Japanese yen hit an eight-month low. Optimism over US-China trade tensions having subsided also meant the offshore Chinese yuan reached its strongest against the dollar since last July.

EURUSD opened at 1.1136 and dropped sharply the day, hitting a low of 1.1090 and closing at 1.1093