Pound finishes slightly down vs. greenback

The pound weakened slightly against the US dollar by 0.1 cents (0.06%) yesterday, to finish the day at $1.5943.

• Sterling weakened against the greenback in early trading yesterday, after Bank of England Monetary Policy Committee member David Blanchflower was quoted as saying investors should not take the pound’s recent rally as proof the global recession has bottomed out: “My worry is that there can be many false dawns and we shouldn’t just assume that everything is over.”
  
• Adding to the downward pressure on the pound mid-morning was the release of weaker-than-forecast CBI figures, which came in at -17 for May, much lower than the -10 analysts expected, and a considerable fall from the 3 registered last month, although this figure may have been skewed due to a late Easter.
  
• However, the pound’s losses were capped to some extent following the release of better-than-expected Core Durable Goods and Unemployment Claims data in the US. The former came in at 0.8%, a considerable improvement on the -2.7% registered last month, whilst the latter registered at 623k, well ahead of the 628k analysts had been forecasting.
  
• However, surprisingly weak US New Home Sales figures halted sterling’s fight back mid-afternoon, after it came in at 352k this month, well below the 363k expected. Nevertheless, the pound only finished slightly down on the day.
  
• In trading so far today the pound has strengthened against the dollar, rising back above the $1.60 level as positive sentiment about the UK’s chances of economic recovery continues.
  
• There are no major announcements due in the UK today, however in the US Preliminary GDP (QoQ) figures are due at 13.30 BST.