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Forex - GBP/USD erases losses but remains under pressure

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Investing.com -

Investing.com - The pound erased losses against the U.S. dollar on Thursday, but remained under pressure as the release of upbeat U.S. economic reports lent sent support to the greenback.

GBP/USD pulled away from 1.6733, the pair's lowest since April 16, to hit 1.6798 during U.S. morning trade, up 0.19%.

Cable was likely to find support at 1.6718, the low of April 11 and resistance at 1.6874, Wednesday's high.

The Federal Reserve of Philadelphia said its manufacturing index ticked down to 15.4 this month, from a reading of 16.6 in April, compared to expectations for a fall to 14.0.

The data came after the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending May 10 fell by 24,000 to 297,000 from the previous week's revised total of 321,000. Analysts had expected jobless claims to fall by 1,000 to 320,000 last week.

A separate report showed that U.S. core consumer price inflation, which excludes food and energy, rose by 0.2% last month, more than the expected 0.1% uptick, after a 0.2% gain in March.

Consumer price inflation rose 0.3% in April, in line with expectations, after a 0.2% increase the previous month.

In addition, the New York Fed said its manufacturing index climbed to a more than two-year high of 19.01 in May, from a reading of 1.29 in April. Analysts had expected the index to rise to 5.00 this month.

On the other hand, U.S. industrial production dropped 0.6% last month, confounding expectations for a 0.1% rise. March's figure was revised up to a 0.9% increase from a previously estimated 0.7% gain.

Meanwhile, the pound remained under pressure after the Bank of England on Wednesday left its forecasts for growth and inflation largely unchanged in its quarterly Inflation Report and indicated that it is still in no rush to hike interest rates.

The BoE said it now expects economic growth of 2.9% in 2015, up from 2.7% in its February report, and said the rate of growth this year would remain unchanged at 3.4%.

Sterling was higher against the euro, with EUR/GBP shedding 0.31% to 0.8154.

Sentiment on the single currency remained vulnerable after Eurostat earlier said the euro zone's gross domestic product grew just 0.2% in the first quarter, compared to expectations for growth of 0.4%. On a year-over-year basis the bloc's economy expanded 0.9%, falling short of expectations for growth of 1.1%.

Separately, Eurostat reported that the annual rate of inflation in the euro zone was unchanged at 0.7% in April, in line with forecasts. The inflation rate is still well below the ECB's target of close to but just under 2%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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