Pound drops most in two weeks as retail sales unexpectedly fall

[BUDAPEST] The pound dropped by the most in more than two weeks as a report showed retail sales unexpectedly fell for a third month in January.

The decline left the currency poised to close below its 55-day moving average versus the US dollar for first time in almost a month.

Retail sales dropped 0.3 per cent, following a 2.1 per cent plunge in December, the Office for National Statistics said on Friday, confounding market expectations for a one per cent increase. UK government bonds climbed after the report, leading a rally in global core securities.

The pound dropped 0.7 per cent to US$1.2398 as of 10.19am in London. The 55-day moving average is at US$1.2425 The pound may find support at US$1.2383, the Feb 15 low, and US$1.2346, the 50 per cent retreat of the move between Jan 16-Feb 2. The yield on UK 10-year gilts fell five basis points to 1.21 per cent.

BLOOMBERG