Pound struggles after weak data 

Sterling was little changed on Friday, trading not far from a one-week low against the dollar as weaker UK data this week has cooled some speculation that the economy may start to recover soon. Skip related content

The pound struggled after a surprisingly big fall in retail sales figures on Thursday gave traders more incentive to book profits. This followed sterling's gains in the past few weeks, when solid data had raised hopes for an improvement in the economy.

"The skew of UK numbers this week certainly is not helping sterling," said Adam Cole, global head of currency strategy at RBC in London.

The figures helped to take the steam out of sterling's climb to the year's high against the euro and a currency basket early this week. This had been due to firmer-than-expected inflation data and a forecast by an industry group that UK economic growth would return in 2010.

On Thursday, the pound fell as low as $1.6187, its weakest in just over a week, after data showed retail sales fell 0.6 percent on the month in May. Economists had expected a rise.

Separate data on Thursday showing a bigger-than-expected deterioration in public finances also kept the pound on the back foot, as it highlighted the weak fiscal position.

The euro was flat at 85.10 pence, staying above 84.19 pence hit earlier in the weak, its lowest level of the year.

Bank of England Governor Mervyn King was quoted as telling a UK regional newspaper that there had been recent signs that the pace of decline in the UK economy was levelling off. However, it was too soon to draw strong conclusions.

His comments were in line with his cautious tone on the economy during a speech earlier in the week.

Minutes from Bank a June 3-4 policy meeting released this week showed a unanimous vote by policymakers to keep rates on hold at a record low 0.5 percent.

They also showed that the Monetary Policy Committee decided to maintain quantitative easing because members judged the better data over the last month had not changed the previous month's dire outlook on the economy.

(Reporting by Naomi Tajitsu; editing by David Stamp)