The Pound fell to a one-week low against the US Dollar on Tuesday after a string of positive data releases bolstered sentiment towards the US currency.
Sterling came under pressure earlier in the session after the British Bankers Association released a report which showed that the number of mortgages being approved by British Banks fell in April, suggesting that the UK’s housing market is showing signs of a slowdown.
The currency was also under pressure from the success of anti-EU group UKIP at the European elections.
Some investors said that the victory could dampen investor sentiment towards the UK due to the possibility of a British exit from the EU in the future.
“The extent that this is seen as detrimental for UK trade and growth, the development could add to the headwinds for the Pound. In the short term investors could continue to focus on the improving economic outlook and the growing prospects for early stimulus removal that would boost the rate advantage of the currency,” said Valentin Marinov, head of G-10 currency strategy at Citigroup.
The US Dollar found support against a number of peers as the session progressed.
Data released by Markit showed that its ‘flash’ services Purchasing Managers Index climbed to 58.4 in May compared to the 55.0 seen in the previous month.
A reading above 50 indicates expansion whereas one below means contraction.
“May’s flash services PMI survey is a further signal that the US economy has regained momentum through the second quarter of the year,” said a senior economist at Markit.
Consumer confidence meanwhile came in as forecast.
According to the Conference Board, confidence increased to 83 in May, up from the previous month’s figure of 82.3.
A separate report showed that U.S. durable goods orders rose 0.8% in April, confounding expectations for a 0.5% fall, after a 3.6% increase in March, whose figure was revised up from a previously estimated 2.9% rise. Durable goods however came in below expectations.
Further gains for the ‘Greenback’ were restrained as manufacturing indexes from Richmond and Dallas both came in below economist forecasts.
US Dollar (USD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
US Dollar,
,Pound Sterling,0.5951,
US Dollar,,Euro,0.7341 ,
US Dollar,,Canadian Dollar,1.0858 ,
US Dollar,,Australian Dollar,1.0812 ,
Pound Sterling,,US Dollar,1.6805 ,
Euro,,US Dollar,1.3626 ,
[/table]
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