Sterling saw a brief uptick on Friday following data that revealed stronger-than-expected UK retail sales in February, providing some optimism about consumer resilience, even as the overall economy showed minimal growth in Q4.

According to figures from the Office for National Statistics released on Friday, British retail sales rose by 1.0% from January, defying expectations. A Reuters survey of economists had forecast a 0.4% decline in sales volumes.

This marked the second consecutive monthly rise in retail sales, following a disappointing figure in December, a crucial month for holiday shopping.

Sterling climbed to a session high of $1.297 after the release of the data, before pulling back to $1.295, remaining largely unchanged for the day. Meanwhile, the Euro was down 0.25% against the Pound, trading at 83.20.

The derivatives market indicates that traders are pricing in around a 50% chance of the Bank of England cutting rates at its May meeting, with Friday’s retail sales data doing little to alter this outlook.

It’s been a volatile week for Sterling, Reuters news agency reports. On one hand, the Pound has been impacted by the global market turbulence following US President Donald Trump’s announcement on Wednesday of a blanket 25% tariff on all imported cars to the United States, which has heightened concerns about the potential for a full-scale trade war.

The US government is set to unveil its complete trade policies on 2^nd April, which will include details on tariffs.

Meanwhile, UK Chancellor Rachel Reeves revealed her budget plans this week, which included announcements of spending cuts. In addition, the UK's Debt Management Office stated that it would issue fewer bonds than initially expected for this year and next.

“Wounds run deep in FX markets and the build-up to (Reeves') Spring Statement was dominated by tough decisions that the Chancellor would need to make. In the end, bond vigilantes and the ‘glass half empty’ brigade were left disappointed,” said Bank of America strategists Kamal Sharma and Sonali Punhani on Friday.

“Where from here? Immediate focus turns to the tariff announcement on April 2nd and positive seasonality through next month,” they added, in reference to the Pound's usual strong performance in April, the month when the new fiscal year starts.

Furthermore, a separate report released on Friday revealed that the UK economy grew by 0.1% in the fourth quarter, in line with expectations from economists polled by Reuters. On a yearly basis, the economy expanded by 1.5%, slightly surpassing the forecast growth of 1.4%.