The pound dropped by the most in seven weeks against the dollar after a government report showed U.K. retail sales unexpectedly declined in August.
Britain’s currency weakened versus 11 of its 16 major counterparts as the data damped optimism the economy is gaining momentum. U.K. government bonds rallied, with 10-year yields falling the most in three weeks, after Federal Reserve policy makers yesterday unexpectedly refrained from slowing debt purchases. The Debt Management Office sold 4.75 billion pounds ($7.63 billion) of five-year gilts.
“Retail sales has proved a bit of a reality check for sterling,” said Simon Smith, chief economist at FxPro Group Ltd. in London. “There had a decent run of better-than-expected data in the U.K. which had been pushing the pound higher and the Fed just gave it last push above $1.60. It had the wind taken out of its sails a bit.”
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