Sterling fell in European trade against dollar for the second session, marking two-week lows following weak data from the UK, cutting the chances of UK rate hikes in February.

GBP/USD fell 0.3% to 1.3558, the lowest since January 10, with an intraday high at 1.3602.

Sterling lost 0.1% yesterday, the fourth loss in five days as the dollar recovers against major rivals, while the pound fell 0.8% this week, on track for the first weekly loss in five on profit-taking.

UK retail sales fell 3.7% in December, passing estimates of a 0.6% drop, which is the steepest decline since January 2021.

Retail sales constitute 70% total local GDP, and the recent drop is a dire sign on the pace of UK economic recovery.

The Bank of England won't just rely on historically high inflation rates in the UK when considering rate hikes, it will also focus on the rate of economic recovery.

Sterling rose in European trade against dollar for second straight session on prospects of a rate hike in the UK following strong inflation data.

GBP/USD rose 0.2% to 1.3637, with an intraday low at 1.3604, after closing up 0.15% yesterday, the first profit in four days following strong consumer prices data in the UK.

The dollar index fell 0.1% on Thursday, the second straight session against a basket of major rivals. 

US 10-year treasury yields stopped spiking ahead of further data on rate hike prospects in the US in March.

In the UK, consumer prices rose 5.4% in December, the fastest such pace since March 1992, passing estimates of 5.2%, after rising 5.1% in November. 

The data increased inflationary pressures on UK policymakers and bolstered prospects of rates a hike in February.

Copper prices fell on Tuesday, after the markets returned from an official holiday, while the US dollar rose against most major currencies.

The markets are parsing the recent Federal Reserve officials statements, in which they hinted at sooner-than-expected rate hikes, which affects the dollar, and in turn, commodities and stocks.

The Federal Reserve will hold its first monetary policy meeting in 2022 next week, but analysts expect that the Fed will keep interest rates unchanged this time, and will start to raise it most likely during the March meeting.

The dollar index rose against a basket of major currencies by 0.3% to 95.5 points as of 14:35 GMT, after hitting a high of 95.5 points and a low of 95.1 points.

Copper March futures fell 0.2% to $ 4.41 a pound, as of 14:26 GMT .

OPEC reported today keeping its 2022 demand growth forecast unchanged, despite concerns about the coronavirus pandemic and Omicron.

OPEC stated that global demand for oil in 2021 reached 96.6 million barrels per day, which is the same as previous estimates.

The organization kept its projection for 2022 unchanged, with a growth of 4.2 million bpd, and the total global demand to 100.8 million bpd.

Bear in mind that OPEC's oil output rose by 166,000 bpd in December, and reached a total of 27.88 million bpd.