The pound extended losses, falling against the US dollar and the euro as weak industrial and manufacturing output data sparked fears about the state of the UK economy. The euro rose on the back of higher stocks, however, the single currency struggled to extend its rally versus the dollar due to technical resistance and options related selling. Across the pond the US dollar shed gains against the Japanese yen after data showed a surprise decline in US retail sales in May, sparking concern about the strength of the US economic recovery. However, the greenback saw losses against most other crosses as consumer sentiment showed an improvement.

Sterling

Sterling fell sharply against the dollar and the euro after data showing unexpected falls in industrial and manufacturing output sparked concern about a fragile UK economic recovery.

US dollar

The dollar surrendered gains against the yen after US retail sales recorded a surprise drop in May breaking a seven-month stretch of solid increases. This did little to US stocks which went unchanged while consumer sentiment index topped forecasts, offering a mixed picture of the health of the US economy.

Euro

The single currency continued to take back some of its recent losses against the US dollar, which helped to support the euro in other crosses limiting falls against currencies such as sterling and the Swiss franc. The gains came as debt market concerns eased allowing stressed money markets to see some stability. Politicians seem to have been able to calm frayed nerves of international investors who are now starting to turn their attention to problems in the UK and US public finances.

Japanese yen

The Japanese yen made ground against the US dollar as a disappointing US retail sales report saw dollar outflows into the yen increase.