The yuan strengthened for a second day even as the central bank set the benchmark midpoint rate at a weaker level, as the dollar retreated broadly ahead of the retail sales data due out later on Wednesday. Onshore yuan strengthened by 0.07 per cent to 6.2046. Offshore yuan gained 0.11 per cent, or 69 basis points, to 6.2025, the strongest level in a week. The People’s Bank of China set the benchmark midpoint rate at 6.1123 against the US dollar, 32 basis points higher than a day earlier and the second straight day of weakening of the benchmark rate. China’s one-year interest swap rate, an indictor of the funding cost on the mainland, fell to a four-year low on speculation Beijing may continue to cut interest rates to support the economy. Traders shorted the dollar ahead of the US April retail sales figure, which is expected to show a mild increase from March’s level. Among the best performers, the British pound rallied to a fresh five-month high against the dollar, with the GPB/USD trading at 7 basis points stronger at 1.5678. Official data showed that UK industrial output grew at its fastest pace in six months in March. The Thai baht strengthened by 0.3 per cent to 33.64 against the US dollar, bouncing back from the weakest level since September 2009 seen on Tuesday.