The pound rose against the dollar on Thursday after data revealed the U.S. economy contracted more in the first quarter of this year than markets were expecting.
Cable was likely to find support at 1.6662, the low from April 15, and resistance at 1.6882, Tuesday's high.In U.S. trading on Thursday, GBP/USD was trading at 1.6715, up 0.02%, up from a session low of 1.6693 and off a high of 1.6740.
The Bureau of Economic Analysis revealed earlier that the U.S. gross domestic product contracted 1.0% in the first quarter, after a preliminary estimate showed growth of 0.1%.
Market expectations had been for a 0.5% contraction. It was the first decline in U.S. GDP since the first quarter of 2011, and the dollar softened on the news, reminding investors that even when the Federal Reserve winds down stimulus programs, rate hikes won't come for some time afterwards.
Still, the report did contain some positive data.
Consumer spending, which drives more than two-thirds of U.S. economic activity, increased by 3.1%, up from the preliminary estimate of 3.0%.
Sentiments that rough winter weather bruised the economy in the first three months of the year as opposed to a major decline in demand supported the greenback as well and capped the pound's advance.
Elsewhere, the National Association of Realtors reported that its pending home sales index rose 0.4% in April, missing expectations for a 1% gain.
Separately, the Department of Labor said the number of individuals filing for unemployment assistance in the U.S. last week fell by 27,000 to 300,000, exceeding expectations for a decline of 9,000.
Meanwhile in the U.K., the pound came under pressure after the Confederation of British Industry said on Wednesday that its index of U.K. retailers dropped to 16.0 this month from 30.0 in April, defying expectations for a rise to 35.
The data came one day after a report by the British Bankers' Association showed that banks approved the lowest number of mortgages since August last month.
The data indicated that the U.K. housing market could be losing some momentum, although house prices remained strong.
Elsewhere, sterling was down against the euro, with EUR/GBP up 0.07% at 0.8139, and down against the yen, with GBP/JPY down 0.16% at 169.93.
On Friday, the U.S. is to round up the week with a report on personal income and expenditure as well as revised data from the University of Michigan on consumer sentiment.
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