The British pound came under pressure in early European deals on Wednesday, after U.K. retail sales fell unexpectedly in April and as minutes from Bank of England's May 9 meeting showed that the call for additional stimulus by governor Mervyn King was overturned by other policymakers for the fourth consecutive month.
As seen in previous months, King, Paul Fisher and David Miles sought an increase in quantitative easing by GBP 25 billion to GBP 400 billion, minutes showed today.
But most members said the effects of the previous round of asset purchases were still coming through and, together with the extended Funding for Lending Scheme, should continue to boost activity.
The nine-member Monetary Policy Committee unanimously decided to maintain the record low 0.50 percent interest rate.
The latest figures from the Office for National Statistics showed that retail sales in the UK declined unexpectedly in April.
Retail sales volume, including auto fuel, fell 1.3 percent month-on-month in April against forecast for a 0.1 percent increase. Sales, excluding fuel, dropped 1.4 percent compared with an expected 0.1 percent growth.
The pound declined to a fresh 4-week low of 0.8576 against the euro, down from Tuesday's 4-day high of 0.8438. The pound has support around 0.865 level.
The euro area current account surplus surged to EUR 25.9 billion in March largely due to an increase in trade surplus, the European Central Bank reported today. The current account surplus amounted to EUR 14.6 billion in February.
The trade in goods totaled EUR 21.8 billion, up sharply from EUR 11.5 billion a month ago. However, the surplus on trade in services fell to EUR 7.6 billion from EUR 8.4 billion.
The pound depreciated to 1.5073 against the dollar for the first time since April 4. The pound may eye support around 1.495 level. At Tuesday's close, the pair finished trading at 1.5150.
The pound declined to an 8-day low of 1.4634 against the franc, after having risen to a 4-day high of 1.4783 on Tuesday. The pound-franc pair closed yesterday's deals at 1.4698.
The pound that advanced to 155.81 against the yen at 4:30 am ET fell immediately after the data. The pound is trading near the 155.25 level against yen, at which it closed yesterday's deals. On the downside, the pound-yen pair may breach 154.00 level.
The Bank of Japan decided to keep its monetary easing program unchanged from that announced in April and said the economy has started to pick up.
Reaffirming its latest easing measures, the central bank's Policy Board said the bank will conduct money market operations so that the monetary base will increase at an annual pace of about JPY 60-70 trillion.
The U.S. existing home sales for April is scheduled to be released in the New York session.
Federal Reserve Chairman Ben Bernanke will testify before the Joint Economic Committee of Congress at 10:00 am ET.
The Fed will release the minutes of its April 30 - May 1 policy meeting at 2:00 pm ET.
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