Sterling gained against the dollar in thin trade on Friday, helped by a survey showing an unexpected rise in UK house prices and by euro/dollar buying. Against the euro, sterling steadied though it remained weak and near seven-week lows after steep losses on Thursday which traders attributed to year-end related euro/sterling buying.
Lender Nationwide said UK house prices rose 0.4 percent in December, the first rise since May, confounding forecasts for a 0.3 percent fall. With trade very thin, however, sterling was driven mainly by movements elsewhere, prodded higher as the dollar came under selling pressure due to reported sovereign buying of the euro against the US currency.
Sterling was up 0.65 percent at $1.5520, with traders saying stop loss orders were triggered on the break of $1.5510. It had support above its 200-day moving average at $1.5405 and a 3-1/2 month low of $1.5345 hit earlier this week. The euro edged up 0.1 percent to 86.20 pence, near a seven-week high of 86.45 pence hit in early trade.
In a technically bullish signal for euro/sterling, the pair's 100-day moving average, currently at 85.06 pence, crossed above its 200-day moving average, at 84.93 pence, this week. There are concerns 2011 could bring more bad news on the UK economy, with government spending cuts and a hike in value added tax expected to hit consumer spending and increase unemployment. Sterling has fallen around 4 percent against the dollar in 2010 and gained just under 3 percent versus a euro under pressure due to the euro zone debt crisis.
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