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Pound Falls As U.K. Retail Sales Drop More Than Expected
(RTTNews) - The pound weakened against its major counterparts in the European session on Friday, as weaker than expected U.K. retail sales data for July reduced possibility of more interest rate hikes from the Bank of England.
Data from the Office for National Statistics showed that the retail sales volume declined 1.2 percent month-on-month in July, offsetting June's 0.6 percent increase. This was the first drop in four months. Sales were forecast to fall 0.5 percent.
Similarly, retail sales excluding auto fuel fell 1.4 percent after June's 0.7 percent increase. July's decline was double the economists' forecast of 0.7 percent drop.
On a yearly basis, the decline in overall retail sales deepened to 3.2 percent from 1.6 percent in June. The annual fall also exceeded the expected fall of 2.1 percent.
Excluding auto fuel, retail sales decreased 3.4 percent after a 1.6 percent drop in the previous month. Economists were expecting a moderate 2.2 percent fall for July.
The pound dropped to 1.2707 against the greenback and 0.8557 against the euro, from an early high of 1.2766 and more than a 5-week high of 0.8521, respectively. The pound is seen finding support around 1.26 against the greenback and 0.87 against the euro.
The pound touched 184.55 against the yen, setting a 3-day low. The pound may locate support around the 182.00 level.
In contrast, the pound recovered to 1.1204 against the franc, from a 2-day low of 1.1168 seen in the Asian session. If the currency extends rise, 1.14 is possibly seen as its next resistance level.
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