Pound to US Dollar (GBP/USD) Exchange Rate edges higher as US consumer sentiment weakens

The Pound made gains against the US Dollar on Friday after the latest consumer confidence data showed a decline in May.

Earlier in the session the ‘Greenback’ found some support from data which showed that home construction in the world’s largest economy increased to its highest level since last November in April. The cause for the strong rise was builders returning to work as the freezing winter weather receded.

The GBP to USD exchange rate is currently trading in the region of 1.6829.

According to the Washington based Commerce Department the number of new housing starts in the USA climbed by 13.2% to an annualised rate of 1.07 million, the previous months figure was 947,000. The figure also beat economist forecasts for a figure of 980,000.

Forecasts for future building activity increased suggesting that there will be a further pickup in home construction over the coming months.

The Dollar’s gains were short-lived after the latest gauge of consumer sentiment fell more than forecast in May as a drop in income growth expectations dragged on otherwise positive outlooks for the US economy.

According to the Thomson Reuters/University of Michigan’s preliminary May reading on the overall index on consumer sentiment came in at 81.8, a drop from the previous month’s figure of 84.1. The drop was unexpected and moved away from the previous nine-month high.

The figure was below economist forecasts for a figure of 84.5.

The gauge of consumer expectations slipped to 73.2 from 74.7 and fell short of an expected 75.0.

“Higher energy prices, higher prices for gas and the rising consumer food prices would be something I would look at as a factor holding back confidence gains,” said an economist from Credit Agricole.

Sterling saw little movement due to a lack of domestic economic data.

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