COZforex: The pound declined to session lows against the dollar on Thursday after data showed that retail sales in the UK unexpectedly declined in October, dampening optimism over the outlook for the economic recovery.

GBP/USD dropped 0.42% to 1.5989 amid European morning trade, down from 1.6054 on Wednesday. COZ senior foreign exchange risk investment trader Desmond Doyle said, GBP/USD is predicted to find support at 1.5916, and a decline through could take it to the next support line of 1.5802. Meanwhile, the pair is predicted to find its first resistance at 1.6106, and a rise through could take it to the next resistance line of 1.6182.2014.

On the economic front, a report showed that the number of people in the UK claiming jobless benefits declined by 41,700 in October, more than market expectation for a decline of 35,000 and following a revised drop of 44,700 registered in the previous month. Meanwhile, the UKs ILO unemployment rate dropped to 7.6% during the 3 months to September, compared to a level of 7.7% recorded in the previous month.

Sterling slid after the Office for National Statistics said retail sales declined 0.7% in October, against expectations for a 0.1% gain. Retail sales rise by 0.6% in September.

Retail sales were up 1.8% on an annualized basis, well below expectations for a 3.1% gain, after rising at an annual rate of 2% in September. Core retail sales, which exclude automobile sales, declined 0.6% in October, worse than forecasts for a 0.2% drop, after increasing 0.8% in the preceding month.

The weak data came one day after the Bank of England brought forward the date it expects the unemployment rate to hit the 7% threshold at which it will consider raising rates and revised up its forecast for growth in its quarterly inflation report. The BoE said it now expects economic growth of 1.6% this year, up from 1.4% in August and growth of 2.8% in 2014, up from 2.5%. The bank still expects growth of 2.3% in 2015.

Meanwhile, speculation over the course of US monetary policy continued following dovish comments from Federal Reserve Chairman nominee Janet Yellen. In a statement released late Wednesday, Yellen said the job market and economy are "performing far short of their potential" and there is "more work to do" on recovery.

(COZ forex UK)