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Forex - GBP/USD trims losses after weak U.S. spending data

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Forexpros - The pound trimmed losses against the U.S. dollar on Tuesday, pulling back from an eight day low after a government report showed that U.S. consumer spending declined unexpectedly in June, falling for the first time in almost two years.

GBP/USD pulled away from 1.6223, the pair's lowest since July 21, to hit 1.6283 during early U.S. trade, down just 0.06% over the day.

Cable was likely to find short-term support at 1.6236, Monday's low and a seven-day low and resistance at 1.6438, the high of July 27.

The Commerce Department said consumer spending dipped 0.2% in June, the first drop since September 2009, after inching up 0.1% the previous month. Analysts had expected spending, which accounts for about 70% of U.S. economic activity, to rise 0.2% in June.

Disposable income edged up 0.1%, the smallest increase since November.

The personal consumption expenditures price index fell 0.2% after rising 0.2% in May. Year-on-year, the index was up 2.6% after increasing 2.6% in May.

But the core PCE index, which excludes volatile food and energy costs, rose 0.1% after gaining 0.2% the prior month.

Earlier Tuesday, a report showed that construction activity in the U.K. eased slightly less-than-expected last month.

The Markit/CIPS construction purchasing managers' index eased down to 53.5 in July from 53.6 the previous month, beating analysts' expectations of a dip to 53.2.

The pound was also lower against the euro, with EUR/GBP easing up 0.08% to hit 0.8750.

Later Tuesday, the U.S. Senate was due to hold a final vote on a measure to raise the U.S. debt ceiling by at least USD2.1 trillion and cut federal spending by as much as USD2.4 trillion.

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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.

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