Forex - GBP/USD erases gains despite U.K. growth data

The pound erased gains against the U.S. dollar on Friday, despite upbeat U.K. economic growth data released earlier in the day, as expectations for a near-term end to the Federal Reserve's stimulus program still supported the greenback. 

GBP/USD pulled away from 1.5638, the pair's highest since August 21, to hit 1.5556 during U.S. morning trade, shedding 0.21%. 

Cable was likely to find support at 1.5510, the low of August 15 and resistance at 1.5638, the session high. 

Sterling strengthened against the dollar earlier, after official data showed that the U.K. gross domestic product grew by 0.7% in the second quarter, higher than expectations for a 0.6% expansion. 

Separately, the U.K. Office for National Statistics said, in a preliminary report, that business invest rose 0.9% in the last quarter, beating expectations for a 0.6% increase, after a 1.9% decline in the three months to March. 

Data also showed that mortgage approvals in the U.K. rose less-than-expected in July, rising by GBP37,200 after a GBP37,300 increase the previous month. Analysts had expected mortgage approvals to rise by GBP38,800 last month. 

But the greenback remained supported after the minutes of the Fed's July meeting showed that officials were "broadly comfortable" with plans to start unwinding the bank’s USD85 billion-a-month bond buying program.

However, officials remain divided over the timing of possible reduction, with almost all committee members agreeing that a change in the asset purchase program was not yet appropriate. 

The minutes described recent U.S. economic data as “mixed”, indicating that plans to taper could be pushed back if the economy was to weaken.

Sterling was also lower against the euro with EUR/GBP gaining 0.31%, to hit 0.8596. 

Also Friday, official data showed that U.S. new home sales dropped 13.4%, or by 394,000 units, in July, confounding expectations for a 1.4% decline. In June, new home sales rose 3.6% by 455,000 units.