Sterling edged up against the dollar and is currently consolidating over 1.64 ahead of US GDP data

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.