The pound continued to fall against the dollar, hitting a two-month low of under 1.98 usd, as the greenback continued to benefit from risk aversion and sterling suffered from waning expectations for higher interest rates. At 1152 BST, the pound was at 1.9815 usd, recovering slightly from a dip below the 1.98 usd level -- its lowest point since mid-June. The decline came as an earlier bounce from strong retail sales proved short-lived. Retail sales were up 0.7 pct in July from June in seasonally-adjusted terms, up from an upwardly revised 0.4 pct increase in June. However, the forecast-beating rise was offset by signs that much of the gain came from price discounting. The implied deflator, a leading price indicator, slumped to -1.1 pct on July last year. Jeavon Lolay at Lloyds TSB said the discounting shows "conditions must be tough for retailers." Expectations that the Bank of England will hike interest rates again from the current 5.75 pct diminished earlier this week when annual CPI inflation for July came in surprisingly weak at 1.9 pct.