BLBG:Pound Weakens Sixth Day Against Dollar as Retail Sales Decline
The pound weakened for a sixth day against the dollar after a government report showed U.K. retail sales unexpectedly declined in December, adding to signs the economy is struggling to recover.
Sterling dropped to a nine-month low versus the euro after excerpts from a proposed speech by Prime Minister David Cameron raised the specter of Britain exiting the 27-nation European Union. U.K. government bonds erased an earlier decline.
“We obviously had very weak retail sales numbers there,” said Christian Lawrence, a London-based currency strategist at Rabobank International. “It’s only if we get some headlines coming out of the mouths of politicians that we’re likely to see much of a sea change in sentiment” toward sterling, he said
The pound fell 0.4 percent to $1.5935 at 10:07 a.m. London time after sliding to $1.5924, the lowest level since Nov. 22. The U.K. currency depreciated 0.2 percent to 83.79 pence per euro after falling to 83.88 pence, the weakest since March 28.
Retail sales including fuel slipped 0.1 percent from November, when they stagnated, the Office for National Statistics said. The median forecast of economists in a Bloomberg survey was for an increase of 0.2 percent. Purchases of household goods fell the most in almost three years.
While Cameron postponed the speech in Amsterdam due to the hostage crisis in Algeria, his office released excerpts for publication before the scheduled address today.
“More of the same” won’t be enough to guarantee the EU’s future due to Britons’ dismay at a lack of consent in their relationship with the bloc, the Prime Minister planned to say, according to the text.
The pound declined this week against all except two of its 16 major counterparts amid concern a loosening of the U.K.’s relationship with the EU will sap investor confidence and threaten London’s role as a financial center.
The 10-year gilt yield was little changed at 2.04 percent, after climbing as much as three basis points, or 0.03 percentage point. The price of the 1.75 percent bond maturing in September 2022 was at 97.455.
To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
