Sterling confidence remained weak following the government-borrowing data on Thursday and the currency was subjected to further selling pressure in Europe on Friday.
The latest UK retail sales data was significantly weaker than expected with a monthly 1.8% decline compared with expectations of a 0.5% fall. The data is likely to have been distorted by tax changes and poor weather during the month, but there was still increased fear over a renewed downturn in the economy which depressed Sterling.
Underlying confidence also remains very weak on structural grounds as government borrowing levels remain a serious market issue. There will be the risk of further selling pressure on the currency if speculation over a credit-rating downgrade intensifies.
Sterling weakened to a fresh 9-month low near 1.5350 against the dollar, but then found support from a general unwinding of long dollar positions and moved back to near 1.5450 later in the session. The UK currency was still generally weaker on the crosses and dipped to 0.88 against the Euro on Monday.