Sterling recovered against the dollar on Wednesday as worries about Hurricane Katrina, oil prices and US growth overshadowed concerns about the UK domestic outlook. Sterling bounced from the previous day's three-week lows against the greenback and also rowed back from earlier two-week lows on the euro after US growth was unexpectedly revised downwards in the second quarter.
Oil was also hovering near record highs of $70.80 a barrel, although prices eased after the United States offered to loan crude to replace production lost when Hurricane Katrina ripped through the Gulf of Mexico.
Sterling fell only briefly after the UK GfK consumer confidence survey gave an unexpectedly low reading of -4 in August, from -1 in July. Recent UK data has heightened expectations of further UK rate cuts, following a quarter-point move to 4.5 percent earlier this month. "We've had a bit of a rebound in sterling but it has been a broad dollar move," said Ian Stannard, currency strategist at BNP Paribas.
"Sterling has an underlying weak tone, further emphasised by the UK consumer confidence data."
Sterling rose as far as $1.7899 but was trading at $1.7861 at 1336 GMT, steady from the US close and half a cent above three-week lows set on Tuesday. Sterling was at 68.32 pence per euro, up slightly on the day and off earlier lows of 68.54 pence.
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