Forex - GBP/USD pushes higher after U.S. data, gains limited

The pound pushed higher against the U.S. dollar on Wednesday, after the release of positive U.S. data, although gains were limited by sustained concerns over the outlook for growth in the U.K. 

GBP/USD hit 1.5188 during U.S. morning trade, the session high; the pair subsequently consolidated at 1.5169, rising 0.28%. 

Cable was likely to find near-term support at 1.5068, Monday’s low and the pair’s lowest since July 2010 and resistance at 1.5275, the high of February 21.

The U.S. Commerce Department said durable goods orders dropped 5.2% in January, compared to expectations for a decline of 4.4%.

Core durable goods orders, which exclude volatile transportation items, rose 1.9% last month, compared to expectations for a 0.2% increase. 

Meanwhile, the U.S. National Association of Realtors said its pending home sales index rose by 4.5% in January, beating expectations for a 1.5% gain. 

In the U.K., the Office for National Statistics earlier said the economy contracted 0.3% in the three months to December, in line with initial estimates and economists’ forecasts.

The economy expanded by 0.3% year-on-year, better than initial estimates of flat output.

The weak data reinforced concerns over the threat of a triple-dip recession, after ratings agency Moody’s downgraded the U.K.’s triple-A rating by one notch last week, citing a weak outlook for growth and a rising debt burden.

Meanwhile, expectations for further monetary easing by the Bank of England remained intact after the minutes of the central bank’s February meeting indicated that policymakers are moving closer to another round of asset purchases.

Overall market sentiment remained subdued amid fears that inconclusive Italian election results could result in a prolonged period of political instability and stoke fresh concerns over the crisis in the euro zone.

Sterling was steady against the euro, with EUR/GBP edging up 0.05% to 0.8643. 

Also Wednesday, an auction of Italian five and 10-year Italian government bonds met with solid investor demand on Wednesday, but saw borrowing costs rise sharply, with the yield on 10-year bonds climbing to a four month high.