3 Min Read
* Graphic: Sterling and gilt yields bit.ly/2dgAXn1
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
* Graphic: Trade-weighted sterling since Brexit vote tmsnrt.rs/2hwV9Hv
By Ritvik Carvalho
LONDON, April 21 (Reuters) - Sterling was flat against the dollar on Friday ahead of UK data expected to show a continued slowing in consumer spending in the lead-up to Britain's European Union exit talks.
The pound surged to its highest level since October on Tuesday after Prime Minister Theresa May's call for an early general election in June, but concerns about a slowing economy have capped its gain to 2.3 percent against the dollar this week.
Buoyant consumer spending gave unexpected resilience to the British economy in the months following the Brexit vote, but sterling's fall after the referendum has pushed up domestic prices, curbing Britons' spending appetite.
British retail sales in the three months to February recorded their biggest slide in nearly seven years, as higher fuel prices eroded shoppers' disposable income.
Sales for March due at 0830 GMT are expected to decline 0.2 percent, according to a Reuters poll of economists.
Sterling was less than 0.1 percent higher at $1.2820 at 0750 GMT.
It was flat at 83.63 pence per euro.
"Any indication of weaker domestic demand conditions may come to the detriment of longer-term inflation expectations, which have been falling already ... we stay of the view that rallies should be sold," Credit Agricole strategists wrote in a note to clients.
British shoppers could face an average tariff of 22 percent on food from the European Union if Prime Minister Theresa May fails to reach a trade deal with Brussels before Britain leaves in two years time, retailers said on Thursday.
Investors are also wary of calls for Scottish independence, which have intensified after May's snap election announcement, and emerging signs of a tough initial negotiating stance on Brexit from the EU - all of which could weigh on sterling.
Britain will be paying off obligations to Brussels for years after Brexit, remain subject to EU courts and go on letting relatives of European immigrants settle in the UK, draft EU negotiating documents show.
A Reuters poll conducted after May's snap election shows there is a one-in-three chance Britain divorces the European Union with no deal and has to trade under World Trade Organization terms. (Editing by Alexander Smith)