Forex News – Sterling plummets after poor UK retail sales

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Sterling dropped sharply against the dollar after poor U.K. retail sales data. GBPUSD dropped to a London session low of 1.5769 from 1.5891 within 30 minutes of the data that was released at 09:30 GMT.

Retail sales in the U.K. declined in February by 0.8 percent as reported by the U.K. Office for National Statistics  on Thursday. This was lower than the forecast for a 0.4 percent monthly fall. What was worse was that  the January number was revised down to 0.3 percent  from 0.9 percent in the initial estimate.

The poor sales data might provide the first indication that U.K. household spending was squeezed to the limit and British consumers  are now cutting back even more on their spending. Spending power has been hit by high inflation and wage growth that has failed to keep track as well as fuel prices that have dampened discretionary purchasing power.

The weak data raises concern that the Bank of England could start thinking again about further quantitative easing, which is a measure than has a weakening effect o the pound.