BRUSSELS (dpa-AFX) - The British pound weakened against other major currencies in the European session on Friday, as U.K. retail sales declined unexpectedly in December on falling food store sales.
The weak U.K. retail sales data added expectations among traders that the Bank of England (BoE) will be forced to cut interest rates by 25 basis points (bps) to 4.5 percent in the policy meeting in February.
Data from the Office for National Statistics showed that U.K. retail sales volume decreased 0.3 percent on a monthly basis in December, in contrast to the revised 0.1 percent increase in November and confounding expectations for an increase of 0.4 percent.
Excluding auto fuel, retail sales declined 0.6 percent after a 0.1 percent gain in November. Sales were forecast to climb 0.1 percent.
On a yearly basis, retail sales grew 3.6 percent after remaining flat in November. However, growth was weaker than forecast of 4.2 percent.
In the European trading now, the pound fell to nearly a 1-1/2-month low of 189.34 against the yen and a 4-day low of 1.1098 against the Swiss franc, from early highs of 190.23 and 1.1149, respectively. If the pound extends its downtrend, it is likely to find support around 187.00 against the yen and 1.09 against the franc.
Against the euro and the U.S. dollar, the pound slipped to 3-day lows of 0.8484 and 1.2161 from early highs of 0.8418 and 1.2245, respectively. On the downside, 0.86 against the euro and 1.20 against the greenback are seen as the next support levels for the pound.
Looking ahead, the European Central Bank will issue euro area current account data for November at 4:00 am ET. Also, the Eurozone final inflation data for December is due to be released at 5:00 am ET in the European session.
In the New York session, U.S. housing starts, building permits, industrial and manufacturing productions reports, all for December, and U.S. Baker Hughes oil rig count data are slated for release.
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