Weak retail sales leads to sterling drop

<p>Sterling was down after weak retail sales.</p>

The release of the latest minutes of the Bank of England's (BoE's) Monetary Policy Committee (MPC) meeting, coupled with weak retail sales data, has led to sterling losing value.

According to Andy Scott, premier account manager at foreign currency exchange brokers HiFX, it was down by 0.5 per cent yesterday morning (May 22nd) as a result of these two factors.

He pointed out that the pound fell against both the euro and the US dollar to a one-month and six-week low respectively, adding: "We expect sterling to stage a slight recovery against the euro back to its comfort blanket around 1.18 given the economic backdrop of the two economies despite speculation of more easing by the BoE."

The MPC once more voted in favour of holding interest rates at a record low of 0.5 per cent for another month, with the committee split.

Mr Scott noted it is unknown how the MPC's policy might change in the coming weeks when outgoing governor of the BoE Sir Mervyn King is replaced by Mark Carney.

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