Pound Slides As U.K. Retail Sales Fall Unexpectedly

The British pound weakened against the other major currencies in the early European session on Friday, after data showed that U.K. retail sales declined unexpectedly in January.

Data from the Office for National Statistics showed that U.K. retail sales including automotive fuel dropped 0.3 percent month-on-month in January, following a 2.1 percent fall in December. Sales were expected to grow 1 percent.

Excluding automotive fuel, the retail sales volume slid 0.2 percent, confounding expectations for an increase of 0.7 percent. Nonetheless, the pace of decline was slower than December's 2.2 percent decrease.

Year-on-year, retail sales growth eased sharply to 1.5 percent from 4.1 percent a month ago. The annual growth was expected to slow moderately to 3.4 percent.

Excluding auto fuel, retail sales growth came in at 2.6 percent versus 4.7 percent in December and the expected rate of 3.9 percent.

Meanwhile, the European stock markets traded lower, extending its early losses from the Asian session. In the Asian trading today, the pound had risen slightly against its major rivals.

In the early European trading, the pound fell to an 8-day low of 140.16 against the yen and a 2-day low of 1.2408 against the U.S. dollar, from early highs of 141.94 and 1.2511, respectively. If the pound extends its downtrend, it is likely to find support around 137.00 against the yen and 1.22 against the greenback.

Against the euro and the Swiss franc, the pound dropped to 10-day lows of 0.8582 and 1.2394 from early highs of 0.8519 and 1.2488, respectively. The pound may test support near 0.87 against the euro and 1.25 against the franc.

Looking ahead, Canada foreign securities purchases data for December and U.S. Baker Hughes rig count data are slated for release in the New York session.