LONDON, June 21 (Reuters) - The pound briefly edged up on Friday, after data showed UK retail sales beat expectations in May, offering some comfort about the resilience of the British consumer a day after the Bank of England paved the way for a possible August rate cut.
A separate release on UK public finances painted a more downbeat picture, which could weigh on gilt prices and, ultimately, sterling.
Sterling rose to a session high of $1.2675 shortly after the retail sales numbers, before nudging back to $1.2669, up 0.1% on the day and heading for a third weekly decline of 0.3%.
The BoE on Thursday left interest rates unchanged at a 16-year high of 5.25%, as expected. Some policymakers said the decision to leave rates where they are was "finely balanced", a sign economists took to mean the prospect of a future rate cut has now moved closer.
On Friday, British retail sales volumes rose 2.9% in May, rising sharply from a revised 1.8% fall in April when heavy rain kept shoppers away, the Office for National Statistics.
Economists polled by Reuters had on average forecast sales volumes would increase by 1.5% on the month.
Against the euro , the pound pared some losses, leaving the single European currency at 84.60 pence.
Kathleen Brooks, research director at trading platform XTB, said the rise might be down to the so-called 'Taylor Swift effect' - where economic activity in numerous locations around the world has reflected the pop icon's sold out Eras tour.
"The ONS said that sales rebounded after a wet April, and sales volumes grew across most sectors, with clothing and furniture sales rebounding strongly. Could this be the Taylor Swift effect, with people (including myself) splurging on new outfits ahead of her Eras tour, the UK leg of which is set to add 1 billion ($1.27 billion) to the UK economy?" she said.
Separately, the ONS reported British public debt rose last month to its highest as a share of the economy since 1961, adding to the financial pressures the next government will face after an election on July 4.
"Overall, the next UK government needs to keep control of public spending as the bond vigilantes are never far away," Brooks said.
($1 = 0.7904 pounds)
Reporting by Amanda Cooper; Editing by Lucy Raitano and Elaine Hardcastle
