Pound to US Dollar (GBP/USD) Exchange Rate mixed as home sales data weighs

The US Dollar is trading slightly higher against the Pound but came under pressure following the release of data reports which painted a mixed picture of the US economy.

Initially the ‘Greenback’ looked set to push away from recent lows against the Pound and push higher against other peers after data showed that the US economy expanded by 3.2% in the fourth quarter of last year as US consumer spending hit the highest level in three years.

Despite the positive data the overall consumer spending amount came in below economist forecasts.

The big surprise came from the latest pending home sales data. According to the National Association of Realtors based in Washington, pending home sales tumbled by 8.7% in December, the sharpest decline recorded since May 2010.

The US Dollar exchange rate is unlikely to be too negatively impacted by the news however as investors cited the decline as being the result of a period of exceptionally cold weather which discouraged prospective buyers.

“Weather has been playing havoc with the housing numbers. We’re getting a bit of a cloudy picture right now. It might take a month or two before they clarify,” said a chief economist at Bank of the West.

The pending sales index was 92.4 on a seasonally-adjusted basis. A reading of 100 corresponds to the average level of contract activity in 2001, or “historically healthy” home-buying traffic, according to the Realtors group.

Also adding some pressure onto the currency was a separate report which showed that initial jobless claims made a surprise rise last week to come close to 350,000. The number of people filing for first-time unemployment benefits climbed to 348,000, up sharply from the previous week’s revised figure of 329,000, the Labour Department said Thursday.

The US Dollar is likely to remain firmer due to the increased demand for safer assets following this week’s emerging market currency rout and as it received support from the Federal Reserve’s decision to continue tapering its monetary easing programme.