Sterling edged higher against the dollar on Wednesday, helped by a bout of short covering after it fell to a one-month low the previous day. The pound pared gains against the dollar after data showed new US single-family home sales fell in July to set their slowest pace on record, giving the dollar some safe-haven support against sterling and other perceived riskier currencies.
Against the euro, sterling edged up, cutting earlier losses as a boost to the single currency following an above-forecast German sentiment survey was soon dampened by concerns about the outlook for peripheral eurozone countries. By 1555 GMT, sterling was up 0.3 percent at $1.5455, moving away from Tuesday's low of $1.5373, its weakest level since late July. Despite the gains, the pound was well below this week's high of $1.5620.
The euro fell 0.2 percent to 81.80 pence, coming off a high of 82.36 pence reached on the back of a survey showing German business morale at a three-year high. Resistance is seen near the 82.48 area, the high struck on August 20. The pound has come under pressure in recent days as investors moved towards safe-haven currencies like the dollar and Swiss franc. Expectations that a deteriorating external climate could encourage the Bank of England to maintain a dovish monetary stance also weighed on the pound.
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