Forex - GBP/USD hits 7-month lows on growth concerns

The pound fell to seven-month lows against the dollar on Monday after Friday’s unexpectedly weak U.K. retail sales data fuelled concerns over the economic outlook.

GBP/USD hit 1.5438 during European morning trade, the pair’s lowest since July 13; the pair subsequently consolidated at 1.5461, shedding 0.35%.

Cable was likely to find support at 1.5320 the low of June 5 and resistance at 1.5507, the session high.

The pound slumped against the dollar after official data on Friday showed that U.K. retail sales dropped 0.6% in January, confounding expectations for a 0.4% increase.

The data fuelled concerns over the faltering U.K. economy, which contracted by 0.3% in the three months to December and added to worries that the U.K.’s triple-A sovereign rating will be downgraded.

Sentiment on sterling was also hit after Bank of England policymaker Martin Weale said Saturday that a weaker currency was a natural way to reduce the country’s current account deficit and that the central bank should overlook the inflationary impact of the weaker pound.

Last week the BoE’s quarterly inflation report warned that inflation would remain above target until early 2016.

Elsewhere, the pound was lower against the euro, with EUR/GBP rising 0.30% to 0.8635.

Trade volumes were expected to remain light on Monday, with U.S. markets remaining closed for the President’s Day holiday.