Forex - GBP/USD Pares Gains After Poor U.S. Housing Data

Forexpros – The pound trimmed gains against the U.S. dollar on Tuesday, pulling away from a two-day high after official data showed that new home sales in the U.S. fell more-than-expected last month.

GBP/USD pulled back from 1.6571, the pair’s highest since Friday, to hit 1.6501 during U.S. morning trade, still up 0.30% over the day.

Cable was likely to find support at 1.6435, Monday’s low and a two-day low and resistance at 1.6617, the high of August 19 and a three-and-a-half month high.

The U.S. Census Bureau said that new home sales fell to a seasonally adjusted annual rate of 298K, from 312K in the preceding month. Analysts had expected new home sales to fall to 310K last month.

Earlier Tuesday, reports showed that U.K. factory orders unexpectedly rose this month, while mortgage approvals hit a one-year high in July.

The Confederation for British Industry said earlier that its balance of total industrial orders rose to 1 in August from minus 10 in July, confounding expectations for a drop to minus 13.

However, the CBI warned that risks to manufacturing activity and business confidence have increased, “due to market volatility and the recalibration of growth expectations world wide."

Separately, the British Bankers Association said the number of mortgage approvals for house purchases rose to 33,417 in July from 32,123 the previous month, the highest level since June 2010.

The pound was also fractionally higher against the euro, with EUR/GBP dipping 0.02% to hit 0.8723.

The euro slid broadly after former Federal Reserve Chairman Alan Greenspan said the euro was “breaking down," adding that resulting difficulties in the European banking system could pose a threat to U.S. economic growth.

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