Sterling slides sharply on retail data and UK bank worries

The pound slid 0.5% against the single currency yesterday, as weak economic data and news concerning Lloyd’s bank reduced demand for sterling.

• Sterling wiped out early slim gains against the single currency after surprisingly weak retail sales data reinforced the view that UK interest rates will stay at record lows for some time to come.
  
• Retail sales remained unchanged in August from July, to disappoint market expectations of a 0.2% monthly increase, a sign consumers are cutting back on spending as unemployment rises.
  
• Separately, a survey from business group, the CBI, found that orders for UK manufactured goods remained weak , further dampening demand for sterling.
  
• However the real blow for sterling came following news that the UK had set tougher-than-expected conditions to the potential exit of Lloyd’s bank from a state-run scheme to protect its assets.
  
• The pound has continued to slide sharply this morning, already posting an intra-day low of 1.1098, as investor sentiment in the UK economy weakens further.