Pound near two-month high on housing market positive, focus shifts to US GDP and FOMC data

UK's pound rallied to a new eight-week high on Wednesday, 29 April, as Nationwide's April housing market indicators came in better than expected, even as the market awaited key US data and FOMC rate decision scheduled to be released later in the day.

GBP/USD jumped to 1.5380, its highest since 3 March, from the previous close of 1.5319. The pair is on track to end its third staring week higher, moving off the six-year low of 1.4565 touched on 13 April.

So far in April, the Sterling has strengthened more than 3.8% against the greenback while the dollar index has dropped 2.4% over the same period, and is on course to post its first monthly decline after nine straight months of higher closing.

Real estate expert Nationwide said on Wednesday that housing prices in the UK rallied 1% in April, sharply above the 0.1% gain in March and beating market consensus of 0.2% rise. Year-on-year the price index has rallied 5.2% compared to the previous month's 5.1% gain and consensus estimate of 4.1%.

Auction of the 10-year gilts and the CBI distributive trends survey for April are the two other UK data listed for the day ahead of Thursday's GfK consumer confidence indicator for April, but the market focus will be on the US GDP data at 12.30pm BST and the FMC rate decision at 6pm BST.

The annual growth rate of US GDP is seen slowing sharply to 1% from 2.2% of Q4-2014 as the first three months of the year have been impacted by bad weather. And the Fed is not likely to announce the date of the first US rate hike since 2006 at the meeting on Wednesday, but the statement could provide more cues regarding the same.

The UK currency's rally, off the multi-year low two weeks ago, was not hindered by the negative surprise in GDP data released earlier this week.

The UK economy expanded only 2.4% from a year earlier in the March quarter, the Office of National Statistics for UK said on Tuesday. It was much slower than the Q4-2014 rate of 3.0% and worse than analysts' forecast of 2.6%. The sequential rate dipped to 03% from 0.6% compared to market consensus of 0.5%.

However, the mortgage data released on the same day surprised on the higher side. Mortgage approvals in the country amounted to 38,800 in March from February's 37,300 beating expectations of 37,900, data showed.