Sterling strengthened against both the euro and the dollar after UK retail sales rose more than forecast in August, boosting investor expectations that the Bank of England will raise borrowing costs in the coming months.

A better-than-expected increase in UK retail sales for February has not altered concern that British consumer spending is on an alarming downward trajectory and that domestic demand — a major driver of the UK economy since last year’s Brexit vote — is faltering.

British retail sales suffered an unexpected dip last month, wrong-footing economists who said rising wages and lower prices still pointed to strong prospects for consumer spending, a mainstay of growth.