Sterling started Friday on a positive gaining back some lost ground and reaching a session high of $1.6609. 

After Consumer confidence fell in the U.S. in August, from 66.0 in July to 63.2, way below the median forecast of 68.5, we saw the pound drop 0.4% against the USD to around $1.6512.

“It does reinforce the view that there’s still a long way to go before you see a sustainable turnaround in sentiment … It just underscores the vulnerability of the recovery so far,” said Samarjit Shankar, director of global strategy at Bank of New York Mellon

This drop in Sterling was further pushed as ‘thin trading conditions’ saw investors ‘stop losses’ triggered, causing sterling to be sold in mass,  we saw the pound fall to a session low of $1.6490.

“We had a bit of a sell off this morning, but to me it just appears to be order related,” said Naeem Wahid, currency strategist at Bank of Scotland Treasury Services in London.

Since hitting a 10 month high of $1.7040 on Aug 5th, sterling has lost around 5 cents. 

The Bank of England’s cautious outlook on the UK economy had taken the shine off the pound and offset a recent string of upbeat economic indicators including last week’s data showing the factory sector returning to growth in July.

The BofE fear that the British Economy will take a long time to recover properly, this comes as the shock extension of QE just over a week ago, which saw QE plan extended from 125 billion to 175billion.

Upcoming data includes July consumer prices on Tuesday, BofE minutes on Wednesday and retail sales on Thursday.

“If we begin to see any sort of strength in retail sales, we’ll see another leg higher in sterling and downward pressure in euro/sterling,” Wahid said.

There were still relatively small movements in GBP/EUR, after sterling saw a 2-1/2 week low of 1.1555, this movement came as sterling started the day at 1.1610.

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