Pound falls despite better than expected GfK data as dollar rallies ahead of GDP

The 12-year high in a consumer confidence reading for the UK failed to prevent the sterling from falling for the second day in the week as the US dollar remained firm after the Fed indicated that it has no plans to depreciate the greenback. Caution ahead of the UK GDP data later in the day also weighed on the pound.

The GBP/USD slipped to 1.4769 from the previous close of 1.4810. The currency fell 0.5% on Monday.

The USD index has risen to an 11-day high of 98.27 on Tuesday, up 0.9% so far this week and distancing further from the three-week low of 96.15 touched on 26 March.

Federal Reserve Vice Chairman Stanley Fisher in his remarks overnight said nothing about the monetary policy or economy but is reported to have said in a Q&A session that the Fed has no plans to depreciate the dollar.

The dollar also had positives from the data prints overnight with the personal income and pending home sales data coming in better than expected.

February personal income growth was 0.4% on the month when analysts had been expecting a 0.3% growth. Similarly, pending home sales growth rose to 3.1% from 1.2% in February while the consensus was for a monthly growth of 0.3%. The year-on-year growth thus rebounded to 12% from January's 8.4%.

The UK GfK consumer confidence for March has risen to a 12-year high of 4 from 1 in February, beating the market consensus of 2, data coming in at 23.05 GMT showed.

The market is now waiting for the final reading of the UK GDP data for the fourth quarter of last year. As per preliminary estimates, the UK economy expanded at a seven-year high of 2.7% from a year earlier in the December quarter from 2.6% in Q3. Any revision will have the potential to move the pound.