Pound Loses More Ground to the Dollar on Weak UK Food Sales

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Pound Loses More Ground to the Dollar on Weak UK Food SalesThe pound touched its weakest level in nearly nine weeks against the dollar after a report showed that U.K. food sales dropped by the steepest margin in more than 5 ½ years, dampening demand for UK assets.

The pound plunged 0.1 percent to trade at $1.6779 as of 10:50 a.m. in London after earlier hitting $1.6757, the weakest level since June 11. The pound advanced 0.3 percent to steady at 79.52 pence per euro after the shared currency bore the brunt of declining German investor confidence.

The pound posted its fourth decline in five days after supermarkets slashed prices, leading to the steepest decline in sales by prices since British Retail Consortium started compiling the data in December 2008.

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“The retail sector is not looking quite as robust as it was earlier in the summer and as a consequence of that, that will keep sterling a little bit on the defensive,” Jeremy Stretch, a London-based head of foreign-exchange strategy at Canadian Imperial Bank of Commerce, told Bloomberg. “We’ve got markets increasingly focusing on that quarterly Inflation Report as well but I think there’s still a risk that sterling has a little more downside to come in the shorter term.”

The Bank of England Governor Mark Carney is scheduled to announce new economic forecasts when he publishes the quarterly Inflation Report on Wednesday. Analysts are keenly awaiting the inflation report which may provide clues regarding when the central bank may hike interest rates for the first time since 2007.

Britain’s food sales in retail stores that remained open for more than a year fell 3.5 percent in the quarter through July from a year ago, said the BRC. It also reported that like-for-like retail sales declined 0.2 percent. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com