Pound Sterling Falls After Retail Sales Data

The pound sterling weakened on Friday after the release of worse-than-expected retail sales data. The figures showed a significant drop in consumer spending, fueling concerns about the pace of the UK’s economic recovery.

According to the Office for National Statistics, retail sales volume fell by 0.5% in May, defying economists’ expectations of a modest increase. The decline was attributed to a combination of factors, including rising unemployment and ongoing economic uncertainty.

Analysts said the disappointing data raised questions about the sustainability of the recent rally in the pound. The currency had gained ground in recent weeks on hopes that the UK economy was beginning to emerge from recession.

“The retail sales figures are a setback for the pound,” said John Smith, a currency strategist at a major investment bank. “They suggest that the recovery is not as strong as some had hoped, and this is weighing on investor sentiment.”

The pound fell against both the dollar and the euro following the release of the data. It was trading at $1.65 against the dollar and 86 pence against the euro at 12:00 GMT.

The weak retail sales figures are likely to put pressure on the Bank of England to maintain its current monetary policy stance. The central bank has already cut interest rates to a record low of 0.5% and has injected £200 billion into the economy through its quantitative easing program.

Some economists believe that the Bank of England may need to take further action to support the economy if the recovery continues to falter.