Forexpros – The pound extended losses against the U.S. dollar on Wednesday, falling to a fresh two-month low after disappointing U.K. retail sales data weighed on demand for sterling amid ongoing uncertainty over the outcome of a European summit later in the day.
GBP/USD hit 1.5679 during European morning trade, the pair’s lowest since March 15; the pair subsequently consolidated at 1.5700, dropping 0.38%.
Cable was likely to find support at 1.5620, the low of March 13 and resistance at 1.5770, the session high.
The U.K. Office for National Statistics said that retail sales fell by a seasonally adjusted 2.3% in April, dropping at the sharpest rate since January 2010 and missing expectations for a 0.8% decline.
Retail sales for March were revised up to a 2.0% gain from a previously reported 1.8% increase.
Meanwhile, in the minutes of its May policy meeting, the Bank of England said it reached its policy decision in the light of projections published in the May 16 Inflation Report, adding that developments in the euro zone continued to be a major influence on the U.K. economy.
Earlier this month, the BoE kept its benchmark interest rate unchanged at a record low of 0.5%, and announced no change to the size of its asset purchase facility which stands at GBP325 billion.
Sentiment broadly weakened after former Greek Prime Minister Lucas Papademos said late Tuesday that Greece had no choice but to stick with a painful austerity program or face a damaging exit from the euro zone, a risk he said was unlikely to materialize but was real.
Investors were also eyeing a key European Union summit later in the day, amid concerns over a divide between France’s new President Francois Hollande, who favors measures designed to support growth and pro-austerity Germany.
Elsewhere, the pound was steady against the euro with EUR/GBP easing up 0.01%, to hit 0.8048.
Later in the day, the U.S. was to publish official data on new home sales.
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