Sterling weakens over a cent vs. USD

Sterling weakened by 1.06 cents (0.64%) against the US dollar yesterday, finishing the day at $1.6461.

• In early trading yesterday sterling hit an eight-month high against the dollar, after better-than-expected data released by Nationwide buoyed investor hope that the ailing UK housing market may soon recover. Confounding predictions of a fall, the building society reported a 0.9% rise in house prices this month, taking the annual rate of house price decline to 9.3%.
  
• However, a scaling down of the UK’s revised first-quarter GDP figure from an initial reading of -1.9% to -2.4% prompted traders to dump the pound mid-morning, as some of the recent optimism surrounding the UK’s recovery cooled.
  
• Sterling’s falls were further extended yesterday afternoon following surprisingly weak US consumer confidence index data. It revealed a fall in June to 49.3 from a downwardly revised 54.8 in May, prompting investors to sell the higher-yielding pound to reduce risk.
  
• In trading so far today, the pound has continued its slide against the greenback as investors brace themselves for some important announcements today.
  
• In the UK, Manufacturing PMI data is due at 09.30 BST, whilst in the US ADP Non-Farm Employment Change figures are out at 13.15 BST, followed by ISM Manufacturing PMI and Pending Home Sales at 15.00 BST.