Sterling jumped against the dollar today after data showed UK retail sales unexpectedly surged in August.

This will increase pressure on the Bank of England to lift interest rates from record lows. 

The pound rose by more than 3% last week after the Bank of England said it was likely to raise interest rates in the "coming months" if the economy and inflation pressures strengthen as expected. 

Policymakers from the bank reinforced that message in subsequent comments. 

Today's numbers showed monthly sales growth accelerated to 1%, the fastest since April and easily beating forecasts for a 0.2% increase in a Reuters poll. 

Sterling jumped to as high as $1.3606 after the data, up from $1.3518 beforehand, and leaving it just a whisker away from a high of $1.3618 reached on Monday, which had been its highest since the Brexit vote. 

Against the euro, sterling was also up 0.2% on the day at 88.57 pence.

However, the pound slipped back a little after a Bank of England agents' report showed pay growth across British companies remains subdued and investment intentions among services firms weakened further in the second quarter.

Sterling had surged yesterday afternoon on reports that British foreign minister Boris Johnson would resign before the weekend if his Brexit demands were not met by Prime Minister Theresa May. 

Markets saw his possible resignation as making the "softer" Brexit that May is pushing for - in which Britain keeps preferential access to the single market - more likely. 

The pound eased back, though, after Johnson denied he could quit and May said he was "doing good work" and should not be sacked. 

Traders said a speech on Friday by the prime minister on Brexit in Italy was the next major focal point for sterling, and that the pound was likely to trade sideways until the US Federal Reserve publishes its latest policy statement later this evening.