Pound Falls Amid Risk Aversion, Weaker-than-expected Retail Sales

The pound declined against its major counterparts in the early European session on Thursday, amid risk aversion after the hawkish Fed statement and news of U.S. President Donald Trump being investigated for obstruction of justice in Russia probe, as well as on weaker than expected domestic retail sales data.

The Federal Reserve raised its key interest rate by 25 basis points and unveiled additional plans to tighten monetary policy despite growing concerns over weak inflation.

The U.S. central bank also said it would start "gradual" shrinking of its $4.5 trillion balance sheet this year, provided that the economy evolves broadly as anticipated.

The Washington Post reported that U.S. President Donald Trump is being investigated by special counsel Robert Mueller for possible obstruction of justice.

Investigators are also looking for any evidence of possible financial crimes among Trump associates, the report showed.

Figures from the Office for National Statistics showed that UK retail sales declined more than expected in May.

Retail sales volume including auto fuel declined 1.2 percent month-on-month in May, reversing a 2.5 percent rise in April. Sales were forecast to drop 0.8 percent.

The Bank of England meets today for monetary policy meeting, but no changes to policy are expected after Prime Minister Theresa May lost the Conservative parliamentary majority at the June 8 general election.

The pound has been trading lower against most major rivals in the Asian session.

The pound edged down to 139.19 against the yen, compared to 139.70 hit late New York Wednesday. The pound is seen finding support around the 138.00 region.

The pound that closed Wednesday's trading at 1.2751 against the greenback slipped to a 2-day low of 1.2697. The next possible support for the pound-greenback pair is seen around the 1.26 level.

Reversing from an early high of 0.8781 against the euro, the pound eased to 0.8804. If the pound extends slide, 0.89 is likely seen as its next support level.

The pound, having advanced to 1.2393 against the Swiss franc at 7:15 pm ET, reversed direction and dropped to 1.2359. Continuation of the pound's downtrend may see it challenging support around the 1.22 mark.

The Swiss National Bank maintained its expansionary monetary policy and reaffirmed its stance to remain active in the foreign exchange market to prevent the franc from appreciating.

The interest rate on sight deposits at the central bank was kept unchanged at -0.75 percent and the target range for the three-month Libor was retained between -1.25 percent and -0.25 percent.

Looking ahead, U.S. weekly jobless claims for the week ended June 10, NAHB housing market index for June, import price index and industrial production for May, as well as Canada manufacturing sales for April are set for release in the New York session.