Sterling falls below $1.39, hurt by Fed and UK retail sales miss

Friday,   18-Jun-2021   02:36 PM (IST)

Sterling extended its fall against the U.S. dollar on Friday, dropping below $1.39, hurt by the U.S. Federal Reserve’s hawkish surprise while data also showed an unexpected fall in Britain’s 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 bond-buying 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. For cable, market participants are weighing up the Bank of England and the Fed’s relative pace of possible monetary policy tightening. The Bank of England next meets on June 24. Elsewhere, investors are watching a dispute between Britain and European Union over post-Brexit trade in the British province of Northern Ireland, which has a land border with EU member Ireland.