The pound fell 0.12 per cent against the dollar to $1.5595 after British retail sales unexpectedly tumbled in June amid broad-based declines in sales of food, household goods and petrol.
Data released today by the Office for National Statistics (ONS) showed retail sales fell 0.2 per cent in June, down from 0.2 per cent growth a month earlier, and missing economists' expectations for a 0.4 per cent rise.
Nevertheless the ONS remained optimistic, saying that the underlying trend remains strong, with retail sales rising 0.7 per cent in the second quarter of this year.
Read more: Why ONS' retail sales are unhelpful
"The June retail sales data are a little disappointing but the underlying trend is still decent and the data are not a body blow to improved second quarter growth hopes," Howard Archer, chief economist at IHS, said.
"The prospects for retail sales and consumer spending look bright for the rest of 2015 and beyond: consumer confidence was at a 15-year high in June, inflation is negligible, earnings growth is improving and employment has risen appreciably overall (despite a relapse in the latest data)."
Industry surveys have so far been mixed. The Confederation of British Industry reported a sharp slowdown in sales growth in June, while the British Retail Consortium said retailers enjoyed strong sales growth.