Forexpros – The pound trimmed losses against the U.S. dollar on Tuesday, pulling away from a two-day low after positive U.S. new home sales data, but a previous U.K. inflation report and uncertainty ahead of a key European summit continued to weigh.
GBP/USD pulled back from 1.5764, the pair’s lowest since May 18, to hit 1.5813 during U.S. morning trade, still down 0.13%.
Cable was likely to find support at 1.5730, the low of May 18 and a two-month low and resistance at 1.5860, the high of March 16.
The National Association of Realtors said that U.S. existing home sales rose by 3.4% to a seasonally adjusted 4.62 million units in April, beating expectations for a 2.9% increase to 4.60 million units.
However, the report said the previous months figure was revised down to 4.47 million units from a previously reported 4.48 million.
The pound came under pressure earlier after official data showed that consumer price inflation in the U.K. eased more-than-expected in April, after accelerating for the first time in six months in March.
The Office for National Statistics said CPI eased to a two-year low of 3% in April, down from 3.5% the previous month, and below expectations for a reading of 3.1%.
The data fuelled speculation that the Bank of England could ease monetary policy further in order to shore up growth, after last week’s inflation report from the central bank cut growth forecasts and warned of the risk to the U.K. economic recovery stemming from the euro zone crisis.
Meanwhile, International Monetary Fund Managing Director Christine Lagarde, said the U.K. government should ease the pace of its austerity program if economic growth remains too slow, while additional fiscal stimulus should also be considered.
Investors were also cautious ahead of Wednesday’s summit of European leaders, amid concerns over a divide between France’s new President Francois Hollande, who favors measures designed to support growth and pro-austerity Germany.
Elsewhere, the pound was higher against the euro with EUR/GBP falling 0.21%, to hit 0.8077.
Also Tuesday, official data showed that public sector net borrowing in the U.K. posted an unexpected surplus of GBP18.8 billion in April, boosted by a Royal Mail asset transfer. Analysts had forecast a public sector deficit of GBP5.8 billion.
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