Pound Sterling to US Dollar (GBP/USD) Exchange Rate – Sterling makes biggest jump in a month as US data comes in mixed

The Pound advanced by its biggest margin in a month against the US Dollar and pushed beyond the 1.21 level against the Euro after the currency found support from far better than expected retail sales.

The US Dollar softened following the release of mixed data. Initially it appeared as though the ‘Greenback’ would find support from the release from positive housing data. Shortly after the data was published the Dollar index managed to push to a four-month high against several peers.

The housing report showed that home construction fell less than had been expected in December, meaning that the US housing industry had its best year since 2007. Yearly Manufacturing and industrial production also came in higher than forecast. On a monthly basis industrial production was weaker than expected.

In a separate preliminary report, the University of Michigan said that its consumer sentiment index fell to 80.4 in January, from a reading of 82.5 the previous month, confounding expectations for a rise to 83.5.

The confidence data raised concerns that the US economy could be slowing down. It follows last week’s disappointing jobs data which showed that employment rose in December by its slowest pace in three years.

Looking ahead to next week the US Dollar looks likely to remain below the Pound due to a lack of US domestic data at the start of the week. In contrast next week will see the release of a number of important UK releases such as unemployment figures, Public sector burrowing figures and business optimism. The ‘Greenback’ could reverse losses if those reports disappoint.