Sterling fell versus the dollar on Wednesday, triggering stop loss orders as it slipped below the key level of $1.65, with better-than-expected US durable goods orders data prompting investors to pare long positions in the UK currency. Market players said sterling would struggle to find clear direction ahead of a speech by Federal Reserve President Ben Bernanke at Jackson Hole, Wyoming on Friday.
Some investors are speculating he may use the speech to signal further monetary stimulus to prop up the faltering US economy. The pound fell 0.5 percent to $1.6411, through stops around $1.6430, with traders citing talk of a large sterling seller at the 1215 GMT European Central Bank fix.
The euro climbed 0.5 percent to 88.00 pence, fuelled by buying by model funds which it above 87.50 pence, traders said. Strong upside resistance was seen around the 100-day moving average at 88.15 and 55-day moving average at 88.21. Market players said some investors had been betting on sterling in recent sessions on the perception the UK is a safer investment destination given US fiscal problems and the euro zone debt crisis that shows few signs of resolution. While sterling has been supported due to its perceived "safe-haven" status, few expect it will gain much more due to expectations that UK interest rates will stay low for a prolonged period as Britain's economy struggles to recover.
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