Investing.com - The pound held steady against the U.S. dollar on Monday, hovering near five-and-a-half year highs after the release of upbeat U.S. data, as expectations that the Bank of England will raise interest rates ahead of other central banks continued to support.
GBP/USD hit 1.7002 during U.S. morning trade, the pair's lowest since June 19; the pair subsequently consolidated at 1.7011, easing 0.02%.
Cable was likely to find support at 1.6924, the low of June 18 and resistance at 1.7075.
The National Association of Realtors said that U.S. existing home sales increased 4.9% to a seven-month high of 4.89 million units last month from 4.66 million in April. Analysts had expected existing home sales to rise 2.2% to 4.73 million units in May.
Separately, market research group Markit said that its preliminary U.S. manufacturing purchasing managers’ index rose to a four-year high of 57.5 this month from a final reading of 56.4 in May. Analysts had expected the index to ease down to 56.1 in June.
The pound remained supported by expectations that the deepening economic recovery in the U.K. will prompt the Bank of England to raise interest rates sooner than other central banks.
Last Wednesday’s minutes of the central bank’s June meeting showed that policymakers were "somewhat surprised" that the financial markets were pricing in a low probability of interest rates rising this year.
BoE Governor Mark Carney said earlier this month that rates could rise sooner than investors expect. The remarks prompted investors to bring forward expectations for a rate hike to the end of this year from the first quarter of 2015.
Sterling was little changed against the euro, with EUR/GBP dipping 0.06% to 0.7988.
Data earlier showed that the euro zone’s composite index of service and manufacturing sector activity fell to a six month low of 52.8 in June from 53.5 in May, indicating that the recovery in the region could be losing momentum.
France’s private sector continued to contract this month, dragging on the euro zone as a whole, while Germany private sector continued to expand this month, but at a slower than forecast rate.
European Central Bank President Mario Draghi said over the weekend that interest rates would stay low over a longer period and that large-scale asset purchases are still part of the central bank's toolkit.