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Investing.com - The pound fell to the day’s lows on Thursday after a data showing that UK retail sales slowed sharply in September added to concerns that the economy is losing momentum.

GBP/USD was down 0.42% at 1.3152 by 05:22 AM ET (09:22 AM GMT) from around 1.3180 ahead of the report.

Retail sales fell by 0.8% last month, the Office for National Statistics reported, confounding forecasts for a decline of 0.1%.

Non-food stores suffered the biggest decline in takings, the ONS said.

Compared with a year earlier, sales volumes have risen by just 1.2%, well below expectations of a 2.1% rise.

The report also showed that shop prices rose by 3.3% over the last year, the largest increase since March 2012.

Rising inflation, largely driven by the fall in the pound since last year’s Brexit vote, has caused a squeeze on household spending. The latest UK jobs report, released on Wednesday showed that wage growth is still lagging behind inflation.

The weak data added to doubts over the outlook for an interest rate hike by the Bank of England in the coming months.

Sterling was also lower against the euro, with EUR/GBP rising 0.53% to 0.8973 from around 0.8940 earlier.

In the euro zone, investors were continuing to monitor the standoff between Catalonia and Spain as the deadline set by Madrid for the region to abandon its independence plans passed.

The Spanish government is poised to suspend Catalonia’s autonomy and impose direct rule after the region’s President Carles Puigdemont refused to abandon the push for independence.