Pound Falls as Retail Sales Decline. More Stimulus Ahead?

The Great Britain pound fell today, dropping to the lowest level in almost two months against the US dollar, after the report showed that UK retail sales declined in August, spurring speculation that Britain’s central bank will be required to stimulate the nation’s economy. British Retail Consortium reported today that UK retail sales values were 0.6 percent lower on a like-for-like basis from August 2010. The previous reading showed a 0.6 percent growth. Helen Dickinson, Head of Retail at KPMG, commented on the negative data: The weaker sectors are really struggling. For non-food, the picture is disheartening with one of the worst monthly results of the year thus far — toiletries, cosmetics, and menswear the only sectors showing growth. This week’s unfavorable macroeconomic reports made traders speculate that the Bank of England will announce a quantitative on its next meeting. BoE policy maker will meet on September 8 to discuss monetary policy and will announce its plan for asset purchases. The pound declined 6 percent from a year ago and was one of the worst-performing major currencies, second only to the dollar that dropped 9.7 percent. GBP/USD slumped from 1.6116 to 1.5936 as of 16:58 GMT today and touched 1.5920, the lowest price since July 13. GBP/JPY traded at about 123.59 after jumping from 123.87 to 125.05.