Investing.com - The pound extended losses against the U.S. dollar on Tuesday, as upbeat U.S. data boosted the greenback, while demand for sterling remained under pressure after Bank of England Governor Mark Carney tempered expectations for a U.K. rate hike this year.
GBP/USD hit 1.6974 during U.S. morning trade, the pair's lowest since June 18; the pair subsequently consolidated at 1.6971, shedding 0.33%.
Cable was likely to find support at 1.6924, the low of June 18 and resistance at 1.7063, the high of June 19 and a five-year high.
The Conference Board said its index of consumer confidence rose to 85.2 this month, the highest level since January 2008, from a reading of 82.2 in May, whose figure was revised down from a previously reported 83.0. Analysts expected the index to rise to 83.5 in June.
A separate report showed that U.S. new home sales rose by 18.6% to a six-year high of 504,000 units last month, blowing past expectations for a gain of 1.6% to 440,000.
New home sales in April were revised down to 425,000 units from a previously reported 433,000 units.
The pound weakened earlier, after BoE Governor Mark Carney said that wage growth has been lower than expected, which could indicate there is more slack in the U.K. labor market than the bank previously thought.
He balanced this by saying that the economic recovery has more momentum than the bank would have expected.
In testimony to parliament’s Treasury committee, Carney said the exact timing of rate rises would be driven by data and reiterated that when rate hikes did come they would be limited and gradual.
Official data this month showed that the U.K. unemployment rate fell to a more than five year low of 6.6% in the three months to April. However, wage growth slowed in the same period, falling to an average of 0.9% from 1.3% during the previous three months.
Market watchers had brought forward expectations for a U.K. rate hike to the fourth quarter of this year from the early part of 2015 after Carney said on June 12 that interest rates could rise sooner than investors expect.
Sterling was also lower against the euro, with EUR/GBP gaining 0.29% to 0.8013.
In the euro zone, data showed that the German Ifo business climate index fell to a six-month low of 109.7 this month from 110.4 in May and compared to estimates of 110.3.