The pound dollar exchange rate has rallied towards 1.56 against the US Dollar today, after a Federal Reserve policy makers expressed concern about the relative strength of the US economic recovery. The UK currency has lost a bit of momentum against the Euro, after encountering strong resistance in the region of the 1.20 level. The Pound bounced back from reports earlier in the day, which showed retail sales dropped last month by more-than-expected, after Wintry weather conditions discouraged shoppers from the highstreet. The report from the British Retail Consortium showed that sales slumped 0.3%, compared with a 0.7% increase in November. The data will provide a little insight into the Sales data from the Office of National Statistics later this month. A subdued figure would almost certainly weaken the Pound, as speculation mounts that the economy is slowing in the face of dramatic spending cuts and the VAT increase. Nevertheless, the British Pound remains in the ascendancy versus the weak Euro and has also taken advantage of broad weakness in the Australia Dollar, as flash floods swept across Queensland yesterday.

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