Grim UK retail sales knock sterling and lift gilts

LONDON, Jan 19 (Reuters) – The pound sagged and UK government bond prices rose on Friday, after a shock drop in British consumer spending in December raised the risk of recession, putting a stop to the currency’s recent gains. The Office for National Statistics said people doing their Christmas shopping earlier than usual – especially for food – contributed to retail sales volumes shrinking 3.2% between December and November. Sterling eased, down 0.16% on the day against the dollar $1.2685 and fell 0.18% against the euro, to 85.76. That was a reversal of recent moves. The pound on Thursday hit its strongest in a month on the euro, and while the dollar has strengthened across the board this year, sterling…