Sterling hit a 2-week low against the euro on Thursday after weak British retail sales increased speculation the Bank of England's recent surprise rate rise may not be repeated anytime soon.
British retail sales fell in July for the first time in six months as electrical stores suffered after a World Cup boost earlier this year. Sales volumes fell by 0.3 percent last month compared with expectations of a rise of 0.2 percent.
"The market fully pricing in another hike from the Bank of England this year was a bit overdone. Weak data like today's retail numbers should see the market move back towards an on-hold Bank of England," said Geoff Kendrick, currency strategist at Westpac.
"That scenario is definitely sterling negative ... particularly within Europe, sterling is likely to be the weakest currency over the next couple of months."
At 1347 GMT, the pound was 0.21 percent lower against the euro at 67.87 pence after earlier falling to a two-week low of 67.97 pence. Against the dollar, sterling was steady around $1.8955, after dipping to the day's low of $1.8934.
The sales data also showed June's initially reported 0.9 percent gain was revised lower to 0.7 percent.
On Wednesday, the BoE minutes from its last rate-setting meeting showed a 6-1 vote in favour of the surprise 25 basis point rate rise to 4.75 percent in early August.
But the Monetary Policy Committee noted there were still considerable uncertainties surrounding its forecasts and said this month's rate hike could be reversed if necessary.
New MPC member David Blanchflower wanted no change in rates because of concerns over the labour market. Public sector finances data for July will be released at 0830 GMT on Friday.
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