RTTNews - During early deals on Thursday, the pound plummeted to multi-day lows against the currencies of Switzerland, Japan, US and Europe as traders continued to sell the pound after weak data on U.K. retail sales and public sector borrowing.

The retail sales unexpectedly fell, driven mainly by fall in footwear and clothing as rising unemployment dissuaded shoppers from buying clothes and shoes. The surprise fall in retail sales also added to fears of a potential recovery in the UK economy. While recent reports from U.K, gave support to the pound showing unexpected rise in industrial production and stable house prices but today's report erased all gains.

A report from the Office for National Statistics showed an annual decline of 1.6% in the U.K. retail sales volume in May. Economists had expected only 0.4% fall in sales.

From April, retail sales volume unexpectedly decreased 0.6%, as economists were looking for a 0.3% rise. In three months to May, total sales volume was 0.6% higher than in the same period of last year. Meanwhile, sales value grew by a seasonally adjusted 1.3%.

Meanwhile a separate report showed public finances deteriorated more than expected, with public sector net borrowing rising to a record high.

The Office for National Statistics said that U.K.'s public sector net borrowing was GBP 19.9 billion in May, up GBP 7.6 billion from the amount borrowed in the same month of the previous year. It was also an increase from revised GBP 10.64 billion borrowed in April. Economists had expected a borrowing of GBP 19.3 billion in May.

There was a net cash requirement of GBP 18.8 billion in May, up from GBP 9.6 billion required in the previous year. It exceeded the expected amount of GBP 16 billion. In April, the public sector net cash requirement was revised GBP 4.7 billion.

Further, the statistical agency said the public sector current budget was in deficit by GBP 17.5 billion. This is a GBP 6.9 billion higher deficit than in May 2008, when there was a deficit of GBP 10.6 billion.

Meanwhile, the Bank of England said in a preliminary report that the M4 money supply grew 16.6% year-over-year in May, slower than the 17.4% increase in April. Economists had expected an increase of 17.3%.

The Bank of England governor Mervyn King said yesterday that economic recovery may be sluggish as banks ration credit to consumers. According to King, the banking system requires more capital to finance a sustained recovery.

Against the US dollar, UK's sterling slipped to a 9-day low of 1.4232 during Thursday's early trading. If the sterling ticks down further, 1.598 is seen as the next likely target level. At yesterday's close, the pound-dollar pair was quoted at 1.6403.

From U.S., the Labor Department is due to release its customary weekly jobless claims report for the week ended June 13th at 8:30 am ET today. At 10:00 am ET, the results of the Philadelphia Federal Reserve's manufacturing survey are due out . Economists expect the diffusion index of current activity to show a reading of -17 for June.

The Conference Board is scheduled to release a report on the U.S. leading index for May at 10 am ET on the same day. The consensus estimate calls for a 0.9% increase in the leading indicators index for the month.

The pound also slumped versus the Swiss franc, falling to a 10-day low of 1.7476 during today's early deals. On the downside, 1.726 is seen as the next target level for the UK currency. The pound-franc pair closed yesterday's deals at 1.7719.

The Swiss franc recouped early losses against its major counterparts amid the Swiss National Bank's rate announcement. Keeping its three-month Libor target rate at 0.25%, the SNB said that it has achieved its aim with FX intervention saying Swiss franc's appreciation against the euro and the volatility had both eased.

The franc that fell to a 3-day low of 1.5128 against the euro ahead of the announcement recouped the losses and thus soared to near a 5-week high of 1.5019 by about 4:30 am ET.

In its March meeting, the Bank lowered the target range for the three-month Libor by 25 basis points, narrowing it to 0%-0.75% from the previous 0%-1% and started bond purchasing and intervening in currency markets on its won for the first time since 1992. Since October, the SNB has cut around 250 basis points to prop up the economy that has been worstly hit by global slump and the government yesterday pledged to increase stimulus spending.

The UK currency tumbled to an 8-day low of 0.8607 against the euro during Thursday's early trading. The next downside target for the UK currency is seen around the 0.879 level. The euro-pound pair closed Wednesday's deals at 0.8504.

The pound continued to trade lower versus the yen and slipped to a near 2-week low of 155.03 by about 5:20 am ET Thursday. The next downside target for the pound-yen pair is seen around the 152.03 level. At yesterday's New York session close, the pair was quoted at 157.07.

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