LONDON: Sterling extended losses on Wednesday after data showed British house prices slipped unexpectedly in June, prompting more speculators to trim long bets on the pound and profit from its recent rally.
Earlier, separate data showed British retailers in June suffering their biggest annual decline in prices since at least 2006. The run of soft data came a day after factory output dropped by 1.3 percent in May - its biggest fall since January 2013.
The pound shed 0.1 percent to $1.7112 while the euro was up 0.2 percent at 79.565 pence.
"The last couple of days has seen some negative data, which is leading speculators to trim their long bets in the pound," said Marshall Gittler, global head of FX strategy at IronFX Global.
"But the long term outlook remains good and buying sterling on the back of good fundamentals is the only game in town."
The latest update to growth forecasts from the respected NIESR think-tank showed Britain's economy enjoyed its strongest calendar quarter in four years in the three months to the end of June, growing by an estimated 0.9 percent.
That would add pressure on the Bank of England to start raising rates from record lows in coming months. The BoE started a two-day policy meet on Wednesday and is widely expected to keep rates unchanged.
Markets are pricing in the chance of a first rate hike either in late 2014 or early 2015, which will be some months ahead of the Federal Reserve, according to current price indications.
Investors are also awaiting the minutes of the U.S. Federal Reserve's latest meeting for direction later in the day. The minutes will shed more light on how the debate within the rate-setting committee is shaping up, traders said, and any dovish signals would help sterling recover ground against the dollar.
"We continue to look for gains above the $1.7175/80 recent range top to open the way to our $1.7400/1.7500 target area," Morgan Stanley analysts said in a note.
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