Weaker UK data sees the pound fall against the dollar

The pound slipped against the dollar on Thursday morning after weaker than expected UK retail sales data have shown that volumes dropped by 0.8% in February compared with January. The pound/dollar cross fell by a point from 1.5880 to 1.5775 before recovering back to 1.58 over the course of the day.

The latest data release will add to the concerns of a lack of growth in the UK economy, prompting speculation of further quantitative easing (QE) from the Bank of England. More QE will be seen as a negative for the pound/dollar rates as the Bank pump more money to into the economy to help stimulate growth.

Although the latest retail figures show the decline was bigger than expected, sales volumes over the last three months were still 1.7% higher compared to the same period last year.

"With consumer spending staying sluggish, government spending contracting and firms reluctant to invest our sub-consensus GDP view for 2012 still holds with the prospect of further QE from the Bank of England remaining in place," said James Knightley, UK economist at ING.

Many analysts still forecast that the GBP/USD cross will end up towards the $1.50 level within the next twelve months, so if you need to buy or sell dollars in the coming months contact me today to discuss your options in more detail. You can complete the contact form on the homepage of the blog or send me a direct email by clicking here.