Investing.com - The pound inched down against the U.S. dollar on Tuesday after a widely-watched U.S. consumer confidence barometer beat expectations though U.K. economic growth rates released earlier kept the pair's decline to a minimum.
In U.S. trading on Tuesday, GBP/USD was trading at 1.6575, down 0.06%, up from a session low of 1.6538 and off a high of 1.6626.
Cable was likely to find support at 1.6479, Friday's low, and resistance at 1.6588, Monday's high.
Data released on Tuesday showed that U.S. consumer confidence rose to a five-month high in January
The Conference Board said its index of consumer confidence improved to 80.7 this month from a downwardly revised 77.5 in December. Analysts were expecting the index to rise to 78.1, and the numbers fueled expectations that the Fed will conclude a two-day policy meeting on Wednesday announcing fresh cuts to its USD75 billion bond-buying program.
Fed asset purchases tend to weaken the dollar by driving down long-term interest rates, thus sending investors to asset classes like stocks, while talk of their dismantling often strengthens the greenback.
Meanwhile a separate report showed that U.S. durable goods orders fell unexpectedly in December, which capped the greenback's gains.
The Commerce Department reported earlier that durable goods orders fell 4.3% in December, confounding expectations for a 1.8% gain.
Core durable goods, which are stripped of volatile transportation items, orders fell 1.6% in December, the largest drop since March, compared to forecasts for a 0.5% increase.
Orders for core capital goods, a key barometer of private-sector business investment, fell 1.3% last month, confounding expectations for a 0.5% gain and after rising 2.6% in November.
Still, investors bet that months of broad improvements to U.S. economic indicators will prompt the Fed to trim around USD10 billion from its USD75 billion bond-buying program.
Meanwhile in the U.K., data showed that the British economy grew 0.7% in the final three months of 2013 and expanded 2.8% from a year earlier, both figures in line with expectations.
While the data left markets without a clear weather vane as to when the Bank of England may raise interest rates, the figures were strong enough to curb the pound's losses against the greenback.
Sterling was higher against the euro, with EUR/GBP down 0.03% to 0.8242, and up against the yen, with GBP/JPY up 0.30% as 170.59.
On Wednesday, the pair will move on the Fed's announcement on interest rates and monetary policy as well as its language.