Forexpros – The pound traded steadily against the dollar on Thursday, erasing losses sustained when reports hit the wire that public sector net borrowing in the U.K. outpaced expectations in February.
In Asian trading on Thursday, GBP/USD traded flat at 1.5873, up from a low of 1.5864 and off a high of 1.5880.
The pair sought to test support at 1.5818, Wednesday’s low, and resistance at 1.5923, Wednesday’s high.
The pound initially dropped after the U.K. National Statistics Office reported that public sector net borrowing increased to GBP12.9 billion in February, outpacing expectations for a deficit of GBP5.2 billion.
Still, the report revealed the government will not breach its borrowing target of GBP127 billion this fiscal year, with borrowing so far in the 2011-2012 fiscal year hitting GBP109.95 billion, down from GBP118.89 billion during the previous fiscal year.
The pound also took a hit when minutes from the Bank of England’s latest monetary policy meeting were released, and it was revealed that two policymakers favored broadening the scale of the bank’s asset purchase program, an easing mechanism that would weaken the pound.
The pound, however, recovered by early Thursday in Asia as the dollar still sought clarity from weaker than expected housing data.
In the U.S., the National Association of Realtors reported that total existing-home sales slipped 0.9% to a seasonally adjusted annual rate of 4.59 million in February, from an upwardly revised 4.63 million in January but a little weaker than expected.
The news, however, sent some investors buying dollars on sentiment that stocks would fall on the data.
Housing data was also not viewed as bad enough to spark talk of further monetary easing in the U.S., which further supported the dollar although in a choppy fashion that gave the pound room to rebound.
The pound, meanwhile, was down against the euro and down against the yen, with EUR/GBP up 0.11% at 0.8335 and GBP/JPY falling 0.05% to 132.34.
Later Thursday, the U.K. is to produce official data on retail sales, the leading indicator of consumer spending, which accounts for the majority of overall economic output.
Also on Thursday, the U.S. will release data on initial jobless claims, a leading indicator of economic health.
Later during the day, Fed Chairman Ben Bernanke is to speak at an event in Washington, and his comments will be closely watched for possible indications on the future direction of monetary policy.
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