Sterling dipped on Friday, stumbling against a broadly rallying dollar in volatile trade after a fall in the US jobless rate prompted investors to book profits on the pound's new year rally against the US currency.
The dollar jumped against most major currencies, bolstered by climbing Treasury yields after a fall in the unemployment rate to 9 percent last month from 9.4 percent in December added to the argument that the US economy is recovering.
The pound relinquished early gains made after a Halifax survey showed UK house prices unexpectedly rose 0.8 percent last month, well above forecasts for a flat reading. "The slight pullback in Cable has a lot more to do with the dollar and with interest rate differentials moving in the dollar's favour, than anything specific to do with sterling," said Michael Derks, strategist at FXPro.
By late London trade, sterling had fallen more than half a percent on the day to a session trough of $1.6036, pulling further away from a three-month high of $1.6279 hit the previous day. "There is a bit of a reluctance to keep long positions or put on new sterling longs above $1.60," said Kathleen Brooks, research director at Forex.com. The euro was flat on the day at 84.45 pence, pulling back from the day's high of 84.77 pence, with traders citing selling by model funds as a factor behind the single currency's retreat. It hovered around its 200-day moving average at 84.55 pence. A daily close below that level would be a bearish signal, technical analysts said.
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