LONDON: Sterling fell on Thursday after data showed the UK economy grew by a solid 0.6 percent in the second quarter, in line with forecasts but disappointing some in the market who had positioned for a better number.
Traders also refrained from buying sterling before a Bank of England meeting and inflation report next month as they expect some form of forward policy guidance, which could weigh on the pound.
Sterling was down 0.2 percent on the day at $1.5272, around a cent below where it traded just before the data. It stayed below chart resistance at $1.5393, Tuesday's one-month high. This coincided with the 61.8 percent retracement from the June 17 peak to the July 9 trough.
"The GDP result came in in line, but expectations had run ahead in recent days, which explains sterling's reaction," said Lena Komileva, director of consultancy G+ Economics.
"The BoE's forward guidance could yet surprise markets on the dovish side, which is what markets are starting to price in."
Although the data suggested the UK was recovering, it showed the economy was 3.3 percent smaller than at its pre-crisis peak in the first quarter of 2008.
Analysts at Morgan Stanley said they would use any further near-term gains to re-establish selling positions.
Sterling has risen more than 3 percent since hitting a three-year trough of $1.4814 in early July, helped by Bank of England minutes which unexpectedly showed all nine Monetary Policy Committee members were opposed to extending stimulus.
Caxton FX analyst Richard Driver said any rise above $1.55 could be a good level to sell, especially as the US Federal Reserve is expected to be the first major central bank to back away from its ultra-loose policy, which will boost the dollar.
The euro rose 0.1 percent to a one-week high of 86.30 pence, helped by a rise in German business morale.
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