Cable down after UK retail sales data

Sterling weakened by 0.68 cents (0.41%) against the US dollar yesterday, finishing the day at $1.6329.

• In early trading yesterday the pound initially rose on the back of improved risk appetite, before nose-diving because of disappointing UK retail sales figures. Sales fell 0.6% in May, well down on analysts’ forecasts of a 0.4% gain. That left them 1.6% lower than in the same month a year ago.
  
• Meanwhile, a Bank of England report showing that lending to British businesses fell by its biggest amount in nearly nine years in April increased selling pressure on sterling. Investors took this news as a sign the recession was far from over despite some positive data recently, with UK companies still finding it difficult to attain credit.
  
• In trading so far today the pound has made limited gains against the greenback as investors consider recent developments.
  
• There are no major announcements out in the UK or US today.