Sterling recovered against the US dollar last week, gaining 0.98 percent to close Friday’s session at 1.3040.

The pound sterling benefited from market optimism over post-Brexit talks. EU Brexit negotiator Michel Barnier said a deal with the UK government was within reach and a new round of talks was announced.

Bank of England Governor Andrew Bailey on Sunday hinted at the possibility of setting negative cash rates, although his comments suggested the bank would only be willing to do so if the UK experienced an economic upswing.

“Our assessment of negative interest rates from experience elsewhere is that they probably seem to work better in the context of a larger wholesale financial market and probably better in a nascent economic upturn,” he said.

On Monday, Bank of England Deputy Governor Jon Cunliffe said British hedge funds, which rely on borrowed money to fund their financial activities, should come under scrutiny because they pose a potential threat to financial stability.

On Wednesday, the bank released the Consumer Price Index, which stood at 0.4 percent in September (month-on-month), after a 0.4 percent decline in the previous month and below analysts’ expectations of 0.5 percent. In year-on-year terms, the index was 0.5 percent, which is more than the previous month’s 0.2 percent and remained in line with analysts’ expectations.

The retail price index rose 1.1 percent, below analysts’ expectations of 1.2 percent and up from 0.5 percent in the previous month. The producer price index, core output, rose 0.3 percent after being at 0 percent the previous month, beating analysts’ expectations for a 0.1 percent gain.

On Thursday, the Confederation of British Industry released its Industrial Trends Survey for October, which showed an improvement from September’s -48 per cent to -34 per cent and much better than analysts who had expected it to be -45 per cent. Consumer confidence fell to -31 in October after being -25 in September and was worse than analysts had expected, who had expected it to be -28.

Bank of England chief economist Andy Haldane told a conference at the National Institute for Economic and Social Research that UK household spending was remarkably resilient, pointing to the US case and arguing that the UK could follow the same path.

On Friday, the Office for National Statistics reported that retail sales rose 4.7 percent after rising 2.7 percent in August and were much better than analysts’ forecasts for a 3.7 percent rise. In monthly terms, retail sales rose 1.5 percent after rising 0.9 percent in the previous month, beating analysts’ expectations for a 0.4 percent gain.

IHS Markit reported a preliminary manufacturing PMI for October at 53.3, signaling slower sector expansion compared to September’s 54.1 and bettering analysts’ expectations of 53.1. The services PMI came in at 52.3, below analyst expectations and showing slower sector expansion since the previous month’s reading of 54.