The pound reached a 3 week high against the euro

The pound reached a 3 week high against the euro yesterday after the Office for National Statistics (ONS) reported that UK retail sales rose by more than expected in February with sales volumes rising by 3.7% in February 2014 compared to February 2013, a much higher figure than had been forecast by analysts.

The ONS data also showed that UK retail sales rose by 1.7% between February and January when they fell by 2%.

Chris Williamson at financial data group Markit commented that the figures showed shoppers had returned to the high street after wet weather deterred them in January. He added that an improving job market and especially lower unemployment, greater job security and rising wages, lower inflation and the housing market recovery should support growth in consumer spending during 2014.

Meanwhile, in a separate report, the Head of the Office for Budget Responsibility has warned that the very rapid house price rises in some parts of the UK may be seen as “bubbly activity” with buyers willing to buy 'off-plan' or when they do not intend to live in the homes which they are purchasing.

Not so good news for the US arms of two of the UK’s leading banks, Royal Bank of Scotland and HSBC who have been forbidden by the US central bank, the Federal Reserve for their American units to pay higher dividends or launch share buybacks in 2014 after the Federal Reserve found “significant deficiencies” in their capital planning processes. The Federal Reserve has already meted out the same treatment to US financial giant Citigroup who have seen their dividend and share buyback plans for 2014 blocked.

Also in the US, the Bureau of Economic Analysis (BEA) reported yesterday that the third and final revision to US growth estimates means that the world’s largest economy grew faster than previously thought during the fourth quarter of 2013 with US Gross domestic product (GDP) expanding at an annualised rate of 2.6% in the final three months of 2013.

This was higher than the second revision figure of 2.4% growth released in February but still under the initial 3.2% expansion estimated in the first reading released in January.

The BEA commented that the upwards revision was mainly down to better-than-expected personal consumption expenditure which is increasing at the rate of 3.3% year-on-year.

Meanwhile, the US Labor Department reported that US jobless claims have dropped to their lowest levels in nearly four months last week with a 10,000 fall to a seasonally adjusted 311,000 in the seven days to 22 March.

This is the lowest level of claims since November.