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Forex - Sterling hits fresh lows after U.K. retail sales fall

Published 23/10/2014, 10:10
Updated 23/10/2014, 10:10
Sterling hits session lows after UK retail sales disappoint

Sterling hits session lows after UK retail sales disappoint

Investing.com - Sterling touched fresh one week lows against the dollar on Thursday after data showed that retail sales in the U.K. posted a larger than expected decline in September, adding to signs that the rate of the economic recovery is cooling.

GBP/USD was down 0.28% to 1.6005 from around 1.6069 ahead of the release of the report.

The pound extended losses after the Office for National Statistics reported that U.K. retail sales fell 0.3% last month, worse than forecasts for a 0.1% decline, to hit the lowest level since January.

On a year-over-year basis retail sales volumes grew 2.7%, below forecasts for growth of 2.8%.

The OSN said the main driver of the decline was in sales of winter clothing due to milder weather in September. Sales of clothing and footwear fell 7.8% from the previous month, the worst monthly performance since April 2012.

The report also showed that shop prices fell 1.4% from a year earlier in September, while food prices declined for the first time since November 2004.

The data came after Wednesday’s minutes of the Bank of England’s October meeting showed that most officials believed there was not enough evidence of inflationary pressure to justify a rate hike.

Most monetary policy committee members also thought an interest rate increase would leave the U.K. vulnerable to shocks in the global economy.

Market participants were turning their attention to Friday’s data on U.K. third quarter growth after recent economic reports saw investors push back expectations for a rate hike to the second half of 2015.

Elsewhere, sterling was lower against the euro, with EUR/GBP up 0.30% to 0.7904.

The single currency found support after data showed that the euro zone saw a modest uptick in business activity in October.

Research group Markit said its preliminary euro zone manufacturing purchasing managers’ index ticked up to 50.7 this month from a final reading of 50.3 in September. Analysts had expected the index to slide to 49.9.

The euro zone's services PMI held steady at 52.4, slightly above expectations of 52.0.

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