Pound Rallies Against US Dollar on Strong UK Housing Data

The British pound today rallied higher against the US dollar in the early European session despite the release of weak UK manufacturing data. The pound’s rally was largely triggered by the weaker US dollar and positive UK housing data released by Nationwide Building Society earlier in the session.

The GBP/USD currency pair rallied higher by over 110 points from a daily low of 1.4159 to hit a high of 1.4275 in the early European session.

The currency pair rallied higher boosted by a renewed sell-off of the greenback as the US dollar gave up some of its post-FOMC gains. The release of the UK Nationwide house price index report, which beat expectations, triggered the rally. The HPI recorded a 0.6% gain in January versus an expected 0.1% gain and also came in at an annualized 3.2% versus the expected 2.5%. The Markit/CIPS UK Manufacturing PMI, which came in at 55.3 and much lower than the expected 56.5 print, contributed to the currency pair’s temporary retreat from its daily high.

Several releases from the US docket such as the US challenger job cuts and non-farm productivity reports had a muted impact on the currency pair. The release of the positive initial jobless claims data by the Department of Labor also contributed to the pair’s decline. The release of the positive US ISM Manufacturing and Employment reports for January also affected the pair.

The currency pair’s future performance is likely to be affected by tomorrow’s Markit/CIPS UK construction PMI and US non-farm payrolls.

The GBP/USD currency pair was trading at 1.4245 as at 15:51 GMT having recovered from an intra-day low of 1.4190. The GBP/JPY currency pair was trading at 155.79 having dropped from a daily high of 156.45.

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