Sterling inches up against dollar, UK data may check gains

LONDON: Sterling climbed against the dollar on Thursday on buying by corporate and some Asian sovereign investors, but it was unlikely to push much higher ahead of the publishing of a private sector retail sales indicator.

Investors are also likely to be wary of building long positions in the pound ahead of a speech by Federal Reserve President Ben Bernanke at Jackson Hole, Wyoming on Friday.

Some investors speculate Bernanke may use the speech to signal further monetary stimulus to prop up the US economy, although many analysts say markets are positioned over-optimistically. Such doubts have given the dollar some support, especially against the yen.

Sterling was up 0.1 percent at $1.6390, on decent-sized corporate demand which took it through stops at $1.6380 early in the London session. It had fallen to a session low of $1.6352 earlier in Asia on some selling by real money investors and model funds, traders said.

Near term support is seen at its 100-day moving average which stood at $1.6294 on Thursday, while upside resistance is around $1.6480 -- a high struck on August 16.

"As long as price trades below $1.6500, we expect a move to $1.63. However a short term bounce cannot be ruled out and will most likely be seen as a selling opportunity by traders," said Alejandro Zambrano, currency strategist at FXCM.

Against the euro, sterling was lower. The common currency was up 0.2 percent at 88.19 pence, hovering just below its 55-day moving average which comes in at 88.22 pence. The common currency was broadly supported by buying from East European investors and speculators.

Traders will take direction from the UK CBI distributive trades data at 1000 GMT and analysts forecast the headline reported sales balance to fall to -10 in August from -5 in the previous month.

Bleak numbers would highlight how UK consumers are continuing to rein in spending in the face of a difficult economic environment and growing pressure on real household income. .

Data released earlier in the day showed British consumer confidence edged down further in July, according to a survey by Nationwide. .

Traders said the pound remains at risk of selling if the data continues to show economic recovery is stuttering and it would increase speculation that the Bank of England may opt for more "quantitative easing" stimulus.

Monetary policy committee member Martin Weale, who changed his vote away from a rate hike at this month's BOE policy meeting, will be delivering a speech later in the day and could give clues on whether he is veering towards a more dovish bias.

Copyright Reuters, 2011