Bloomberg News

Pound Falls to One-Month Low Versus Euro as Retail Sales Decline

June 07, 2011

June 7 (Bloomberg) -- The pound weakened against the euro for a sixth straight day after a report showed U.K. retail sales unexpectedly declined in May.

Sterling also dropped against the New Zealand dollar and Swedish krona after the British Retail Consortium said sales at stores open at least 12 months, measured by value, fell 2.1 percent from a year earlier, compared with a 5.2 percent increase in April. Economists had forecast a 2 percent gain. The U.K. Debt Management Office plans to auction 1 billion pounds ($1,635) of inflation-linked bonds due in March 2040 today.

The pound slipped 0.3 percent to 89.41 pence per euro as of 7:36 a.m. in London, the weakest since May 5. Sterling climbed less than 0.1 percent to $1.6370 and gained 0.3 percent to 131.44 yen.

The pound fell and U.K. government bonds rose yesterday amid deepening concern that the government’s austerity drive is damping growth and will compel the central bank to keep interest rates on hold for longer.

--Editors: Matthew Brown, Mark McCord

To contact the reporter on this story: Paul Dobson in London at pdobson2@bloomberg.net

To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net


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