GBP trims gains on USD on Irish referendum reports

The sterling trimmed gains against the dollar on Tuesday, amid reports of a looming Irish referendum on the European Union fiscal compact, although the pound remained supported before the European Central Bank’s liquidity operation, reports forex-rateit.com.

The GBP fell from its daily high of 1.5876 to hit 1.5826 in US morning trade, remaining up by 0.01 per cent. Risk sentiment weakened after the prime minister of Ireland confirmed that the nation will hold a referendum during the weeks ahead on the European Fiscal Compact Treaty, which is proposing stricter budget disciplines, including near-zero public deficits, on every state within the eurozone.

The reports come on the back of mixed economic data from the US. The Conference Board stated earlier that its US consumer confidence index climbed to a 12-month high in February, rising to 70.8 from 61.5 in January, far outstripping forecasts for an increase to 63.0.

However, the Commerce Department said that orders in the US for long-lasting manufactured goods dropped by the most for three years in January. Orders for durable goods fell by four per cent, following forecasts of a decline of 0.8 per cent, while orders for core durable goods, which excludes transportation items, dropped by 3.2 per cent in January.

The sterling remained supported as markets look towards the ECB’s second three-year refinancing operation, after an earlier liquidity injection last December prevented a credit crunch and loosened pressure on eurozone bond markets.