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Forex - GBP/USD trims losses but holds near 4-1/2 month trough

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Investing.com -

Investing.com - The pound trimmed losses against the U.S. dollar on Thursday, but held steady close to a four-and-a-half month trough after the release of a flurry of strong U.S. economic reports, as earlier U.K. data continued to weigh.

GBP/USD pulled away from 1.6564, the pair's lowest since April 4, to hit 1.6585 during U.S. morning trade, still down 0.06%.

Cable was likely to find support at 1.6556, the low of April 4 and resistance at 1.6679, Wednesday's high.

The Federal Reserve Bank of Philadelphia said that its manufacturing index improved to a more than three-year high of 28.0 this month from July's reading of 23.9. Analysts had expected the index to decline to 19.2 in July.

Separately, market research group Markit said that its preliminary U.S. manufacturing purchasing managers' index increased to a four-year high of 58.0 this month from a final reading of 55.8 in July. Analysts had expected the index to ease down to 55.7 in August.

Data also showed that U.S. existing home sales increased 2.4% to 5.15 million units last month from 5.03 million in June. Analysts had expected existing home sales to dip 0.4% to 5.02 million units in July.

The reports came after the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending August 16 decreased by 14,000 to 298,000 from the previous week's revised total of 312,000.

Analysts had expected jobless claims to fall by 12,000 to 300,000 last week.

The pound hit fresh four-and-a-half month lows against the dollar earlier, after official data showed that U.K. retail sales rose 0.1% in July, disappointing expectations for an increase of 0.4%. Retail sales for June were revised to a 0.2% gain from a previously estimated 0.1% rise.

Sterling was lower against the euro, with EUR/GBP adding 0.16% to 0.8003.

Also Thursday, data showed that activity in the euro zone's manufacturing sector slowed to a 13 month low in August, with the euro zone manufacturing purchasing managers' index down to 50.8 from 51.8 in July. Economists had forecast a decline to 51.3.

The region's services PMI slid to 53.5 from 54.2 in July, in line with forecasts.

Activity in Germany's factor sector slowed but remained solid, while manufacturing activity in France contracted for a sixth successive month.

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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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