Pound stays lower against dollar as EU concerns dominate

The sterling stayed lower versus the dollar on Wednesday , after positive US economic reports were released and skepticism about what will come from this week’s European summit continued to weigh on market sentiment.

GBP/USD fell to 1.5546 in US morning trade, the lowest the pair has been since 25 June; subsequently, the pair consolidated at 1.5565, falling 0.50 per cent. Cable was expected to find support around 1.5503, the 16 June low, and resistance at Tuesday’s high of 1.5649.

A National Association of Realtors report revealed that pending home sales climbed by 5.9 per cent in May, way past expectations of a one per cent rise, to equal March’s two-year high.

The report followed official data that showed US durable goods orders increased by 1.1 per cent in May, surpassing expectations for a rise of 0.4 per cent, a sign the manufacturing sector is rebounding after a 0.2 per cent fall last month. However, orders of core durable goods, which do not take transportation items into account, went up by 0.4 per cent in May, failing to hit forecasts for a jump of 0.7 per cent.

Meanwhile, investors continued to act cautiously ahead of Thursday and Friday’s EU summit amid increasing doubts that leaders would come up with any ideas for greater fiscal integration and enabling the region’s rescue funds to purchase government debt.