Retails Sales Drift Down, Sterling Follows

The Great Britain pound fell today after a report showed that UK retail sale declined. The negative data ahead of the policy meeting makes market participants question what actions the central bank will take.
British Retail Consortium reported that retail sales were down 3.3 percent in April from a year ago. In March, an increase by 1.3 percent was registered. The United Kingdom face a double-dip recession and various indicators show it.
The Bank of England will hold a monetary policy meeting yesterday. Analysts are divided in their forecasts of the central bank’s decision. Many experts predict that the bank will keep its interest rates and asset purchase program unchanged. Yet easing of the policy cannot be considered improbable in the light of poor fundamentals.
GBP/USD slipped from 1.6175 to 1.6129 as of 22:51 GMT today, while the daily minimum of 1.6066 was the lowest since April 20. GBP/JPY fell from 129.04 to 128.42 and reached the low of 127.80 — the lowest since April 17. The pound still retained its appeal as a haven against Europe’s crisis and as a result EUR/GBP dropped from 0.8047 to 0.8016, reaching 0.8013 intraday — the lowest price since November 2008.

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