Sterling Hit by Consumer Fears

Sterling fell on Tuesday as weak economic data stacked up to show that belts were tightening across the UK as housing market conditions worsened and rising prices hit consumers in the pocket.

The Confederation of British Industry reported that its monthly retail sales balance fell in July to its lowest point since the data series began 25 years ago. The balance showed that 61 per cent of retailers in the survey believed high street conditions had worsened from a year ago.

Meanwhile, mortgage approvals in the UK also fell to their weakest levels on record in June, while net consumer lending dropped to a nine-year low.

Analysts believe that as soon as the Bank of England is able to stem inflation, it will be forced into a round of rate cuts to help stimulate growth, putting even greater pressure on the pound.

The pound fell 0.3 per cent against the dollar to $1.9885, and lost 0.2 per cent against the euro to £0.7911.

Sterling Hit by Consumer Fears, Financial Times
7/29/2008 6:46:26 AM