Cable remains firm around 1.45

Sterling weakened against the dollar yesterday on the back of grim US data, with figures showing US consumer confidence dropped to another record low in February, while a survey showed US home prices falling at a record pace in December. The pound was also weighed down by further bleak housing figures from the British Bankers Association, and renewed speculation about quantitative easing in the UK.

However, the pound strengthened against the dollar yesterday evening and overnight, as risk appetite got a boost in the New York session from Bernanke’s comments that major US banks may not need to be nationalised. Bernanke also suggested that if the stimulus plan is successful it could begin to pull the US economy out of the recession by the end this year, although he cautioned that policymakers expect a full recovery to take two to three years.

In the UK today Gross Domestic Product figures will be released at 09.30 GMT. In the US, Existing Home Sales data will be announced at 15.00 GMT this afternoon.

GBPUSD: 1 week chart. Click on graph to enlarge.