Investing.com - The pound slumped against the dollar on Wednesday after a robust report on new U.S. home sales gave the greenback broad support, though solid U.K. growth rates cushioned the pair's losses.
In U.S. trading on Wednesday, GBP/USD was trading at 1.6642, down 0.24%, up from a session low of 1.6622 and off a high of 1.6701.
Cable was likely to find support at 1.6584, Monday's low, and resistance at 1.6727, Tuesday's high.
The Commerce Department reported earlier that new home sales jumped 9.6% to 468,000 units in January, blowing past market expectations for new home sales to fall 1% to 400,000.
New home sales in December were revised up to 427,000 units from a previously reported 414,000 units.
The numbers renewed perceptions that a wave of soft production, jobs and other economic indicators hitting the wire this year reflected rough winter weather that disrupted commerce and less due to an any softening of demand.
Investors were looking ahead to testimony by Federal Reserve Chair Janet Yellen on Thursday for insight as to whether or not the U.S. central bank will maintain the current pace of reductions to its stimulus program.
Markets were expecting that Yellen will echo past statements that the U.S. monetary authority will continue rolling back its asset-purchasing program as long as the economy improves as expected.
The Fed is currently buying $65 billion in Treasury and mortgage debt a month to suppress interest rates to spur recovery, which weakens the dollar as a side effect.
Meanwhile in the U.K., the Office for National Statistics said gross domestic product increased by 0.7% in the three-month to December, unrevised from the preliminary estimate and in line with forecasts, which gave the pound some support against a firming greenback.
On a year-over-year basis, the U.K. economy expanded by 2.7% in the fourth quarter, down slightly from the preliminary estimate for 2.8% growth.
The largest contributors to fourth quarter growth were household spending, business investment and net trade, the ONS said. Business investments were revised up 8.5% from the same period a year earlier.
Sterling was up against the euro, with EUR/GBP down 0.30% to 0.8214, and up against the yen, with GBP/JPY up 0.04% as 170.61.
On Thursday, the U.S. is to release data on durable goods orders, a leading indicator of production, and the weekly report on initial jobless claims.