GBP to USD (GBP/USD) and Euro to US Dollar (EUR/USD) Exchange Rates Ease from Lows

The Pound to US Dollar (GBP/USD) exchange rate edged away from a 5-month low and the Euro to US Dollar (EUR/USD) exchange rate eased away from an 11-month low on Tuesday following the release of mixed economic data out of the United States.

On Monday the US Dollar against the Pound and Euro after a report published by the Commerce Department, showed, that the pace of new-home sales declined to its slowest pace in four months. New home sales fell unexpectedly by 2.4% to an annualised pace of 412,000, below economist forecasts.

Investors chose to look beyond the headlines of Tuesday’s US Commerce Department data and instead focused on the more disappointing side of the day’s data releases.

According to the Washington based Commerce Department, Orders for Durable Goods increased in July to record breaking levels after a surge in demand for commercial aircraft and business equipment.

Orders for goods meant to last more than three years surged by 22.6% and saw demand for aeroplanes soar by a staggering 318%, the largest jump recorded since January 2011. Economists had been forecasting for a rise of just 7.5%.

However, despite the massive increase in demand for those goods investors were somewhat disappointed by Core durable goods orders, excluding volatile transportation items which fell by -0.8% in July, a figure which was worse than the 0.5% gain forecast by economists. Core durable goods orders increase by 1.7%.

‘July’s spectacular durable goods orders provide a misleadingly strong signal on the strength of the economy, although the outlook for business investment is improving,’ said Capital Economics.

Another report released the Standard & Poor’s and Case-Shiller home price index increased at its slowest pace in 18 months in June, reducing optimism over the country’s housing sector.

Standard & Poor’s with Case-Shiller said its house price index rose at an annualized rate of 8.1% in June from a year earlier, below forecasts for a gain of 8.4% and following a rise of 9.3% in May.

Following the publication of the report the US Dollar held onto its losses against the Pound and Euro.

Further losses for the US Dollar were restrained however after the latest Consumer Confidence data out of the world’s largest economy came in better than forecast in August.

The report showed that consumer confidence increased to a reading of 92.4 in August, up from the preceding month’s figure of 90.9 and beat economist expectations for a figure of 89. The figure was the best recorded since October 2007.