Pound Falls below 1.39, Hurt by Fed, UK Retail Sales Miss

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LONDON, June 18 Reuters Sterling extended its fall against the U.S. dollar on Friday, dropping below 1.39, hurt by the U.S. Federal Reserves hawkish surprise while data also showed an unexpected fall in Britains retail sales.

The pound dropped against a strengthening dollar on Thursday after the Fed surprised markets by signalling it would raise interest rates and end emergency bondbuying sooner than expected.

On Friday, it fell further against both dollar and euro. At 0747 GMT it was down 0.4 on the day 1.3871, having touched as low as 1.38555 its weakest since May 4. It was on track for its worst week since September 2020.

Versus the euro, it was down around 0.4 at 85.87 pence per euro, on track for a small weekly fall.

British retail sales fell 1.4 between April and May as a lifting of lockdown restrictions encouraged spending in restaurants rather than shops. The data did not have clear impact on the pound.

GBPUSD remains bogged down below the 1.39 handle by a confluence of broad USD strength and a slight deterioration in nearterm data, said Simon Harvey, senior FX market analyst at Monex Europe.

The limited impact of the data on sterling is largely because retail sales volumes remain above prepandemic levels and a shift in consumption patterns towards services after the May 17th reopening was always likely.

For cable, market participants are weighing up the Bank of England and the Feds relative pace of possible monetary policy tightening. The Bank of…

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