Sterling hit an eight-month high against the dollar on Tuesday due to surprisingly strong UK house price data, but its gains fizzled out after a moderating decline in US home prices later boosted the US currency.
Weaker-than-expected figures on UK gross domestic product also stung the pound on the view that the nation's economy continues to struggle, knocking sterling from its highest level of the year hit against a currency basket in early London trade.
Trade was volatile on the last day of the quarter and half-year, and analysts said corporate demand to buy and sell the dollar for last-minute book keeping purposes was driving broader currency movements. Sterling initially rose more than 1 percent on the day against the dollar to $1.6745, its highest since mid-October, after the Nation-wide building society said house prices rose 0.9 percent in June, confounding forecasts for a fall.
By 1415 GMT, sterling traded at $1.6440, 0.7 percent lower on the day and off the high hit in early trade, as sluggish US confidence data drove stock prices lower, cooling some demand for risk. On a trade-weighted basis, the pound was at 84.0, retreating from 84.7 hit in the wake of the currency's rally against the dollar when London trade got underway. The euro was up 0.3 percent at 85.30 pence, recovering from a slide to 84.37 pence.
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