GBP/USD trims gains following positive US data

The pound trimmed gains on the US dollar yesterday after better-than-anticipated US economic data dampened expectations for further Federal Reserve easing measures, according to forex-rateit.com.

GBP/USD fell back from a daily high of 1.5874 to hit 1.5853 in US morning trade, a rise of 0.12 per cent. Cable was expected to find support at the 21 February low of 1.5772 and resistance at the 28 February high of 1.5906.

The Institute of Supply Management revealed that its non-manufacturing purchasing managers’ index jumped to 57.3 in February from 56.8 in January. Analysts had forecast an index decline to 56.1. A different report showed that factory orders in the US fell by a seasonally adjusted one per cent in comparison with expectations for a drop of 1.3 per cent.

Meanwhile, the pound remained under pressure before the 8 March deadline for private creditors from Greece to join the agreement in which they will swap their Greek holdings for government bonds in what is referred to as a debt swap deal. Failure to agree on this debt restructuring deal would see the country back on the verge of a sovereign debt default.

In addition, sentiment weakened earlier after Wen Jiabao, the Chinese premier, cut the country’s economic growth target of eight per cent to 7.5 per cent for 2012 in order to give the speed of economic expansion breathing space to moderate if necessary.