Weak US data yesterday afternoon strengthened dollar appeal, trimming sterling’s gains

A mixed bag of data in the US prevented the pound from sustaining early gains yesterday, eventually closing just 0.1% up on the day at $1.5980.

  • The pound shot up against the dollar in early trading, posting an intra-day high of 1.6123, after an industry report showed consumer confidence in the U.K. jumped by the most in 14 years.
  • But the greenback trimmed its losses after the ADP Non-farms employment data revealed a worse-than-expected change in US employment which eased risk appetite and returned investors to the haven currency.
  • The sharp dip, was initially offset as more data revealed an upward revision in the US GDP figure to just a 0.7% contraction from a previous -1.0%, and beating forecasts of a downward revision.
  • However, later in the afternoon a weak reading of US manufacturing activity triggered mild safe-haven flows into the greenback, confirming investors’ fears that a sustained economic recovery is struggling to take hold.
  • The dollar is trading marginally higher again this morning with traders awaiting important data on US employment, released today at 13:30BST.