LONDON: Sterling fell against the dollar and the euro on Thursday after data showed the biggest monthly decline in British retail sales for six months in June, keeping alive expectations that the Bank of England will ease policy as early as next month.
Sales volumes fell 0.9 percent, more than the forecast 0.6 percent, after rising by an above-average 0.9 percent in May. Compared with a year earlier, sales growth slowed to 4.3 percent from 5.7 percent in May, versus forecasts of 5.0 percent.
Retailers reported no anecdotal evidence that the unexpected result of the June 23 referendum affected sales during the five-week period which ended July 2, the Office for National Statistics said.
Sterling hit a low of $1.3157 after the data, down 0.2 percent on the day, having traded at $1.3210 beforehand. It recovered some of those losses to trade at $1.3200, still down 0.1 percent on the day.
The euro rose to 83.80 pence, having traded at 83.36 pence before the data was released. It was last trading at 83.45 pence, still up 0.2 percent on the day.
The euro got an additional boost after European Central Bank chief Mario Draghi gave no hint the ECB would soon ease policy further. He said the bank would take time to reassess any changes in the economic outlook.
"Despite the ONS saying there is no discernible anecdotal referendum effect, given the weak number, it's not something you can rule out," said Chris Hare, an economist at Investec.
"We've seen a pretty sharp fall in some consumer confidence measures so that would point at least at the margin to some referendum effect."
Sterling earlier had traded higher in Europe after Bank of England policymaker Kristin Forbes said it should not rush to cut interest rates. Noted hawk and policymaker Martin Weale also said this week he was unsure if he would back a rate cut at next month's meeting.
Mirroring that view, Forbes said in an article in the Daily Telegraph that until more hard data are available, it would be good to "keep calm and carry on".
The BoE said last week that most of the nine members of its Monetary Policy Committee expected to give the economy more help at their next meeting, which ends on Aug. 4. But two of them seem to favour waiting and watching.
"The more hawkish members of the MPC are coming out against their support for easing in August," said Hans Redeker, the head of currency strategy at Morgan Stanley.
"This could cause markets to limit how much easing they price in for August. We remain sellers of sterling/dollar on rebounds as our economists are expecting enough members to vote for easing."
On Wednesday, the pound got a boost from a BoE survey that showed no clear evidence of slowing activity after last month's Brexit vote.
Traders are now awaiting flash PMI surveys of company purchasing managers on Friday for more insight on the immediate economic reaction to the vote.
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