LONDON (ShareCast) - Sterling moved back down on Thursday as retail sales dropped 3.9% in June, the biggest decline since records began 22 years ago.

Experts now think interest rates are unlikely to rise in the near future and could begin to fall by the end of 2008 or early next year

The size of the tumble caught out analysts who had predicted a 2.6% fall in June to follow the surprise 3.5% climb in May reported by the Office for National Statistics (ONS).

The euro was lower after the euro zone purchasing managers index for services fell to 48.3 in July from 49.1 the previous month, while the Ifo Institute's German business climate index also came below forecasts.

In the US, sales of existing homes fell 2.6% in June to an annualised rate of 4.86m, lower than the 4.95m that economists had been expecting.

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