Sterling closed marginally up against the US currency yesterday, although the price was pulled back significantly following weak US housing data.
- In early trading, the pound lost ground to the dollar as falls in equity prices encouraged investors to trim their exposure to perceived higher risk currencies.
- UK stocks slid to a three-week low, helping to push the price down to 1.63, well under a level just below 1.67 reached only a week ago.
- The pound was then able to make slight gains in the afternoon after positive durable goods data weakened dollar demand, but the pair found resistance at 1.64.
- This data was then offset in the afternoon after it was revealed that sales of new homes in the US declined in September, against analyst expectations of a slight increase, which supported an upside movement
- In trading today, markets will take direction from the US third-quarter GDP figure at 09:30, which is predicted to show a growth rate of 3.3%. Should it undershoot this forecast, investors are likely to move back into the dollar.