Sterling falls

Sterling slipped on Tuesday after UK mortgage and consumer credit data pointed to still lacklustre economic growth, with the pound vulnerable to further weakness as investors and speculators focused on shaky UK fundamentals. The pound was last down 0.8 percent at $1.6268, with stops through $1.6290 triggered on its way down.
Weak US consumer confidence data led to further losses, with sterling making a decisive break below its 100-day support at $1.6295, indicating further losses were in store. Bank of England (BoE) consumer credit data showed individuals' appetite for borrowing unexpectedly slowed in July while UK net mortgage lending remained subdued, rising by just 0.7 billion pounds.
Although the data was largely in line with expectations and mortgage approvals inched up to 49,239, their highest level since May 2010, analysts said the numbers contributed to an overall gloomy picture of the economy and pressured sterling. Separate figures showed the BoE's preferred money supply gauge - M4 excluding intermediate and other financial corporations - picked up to grow 0.6 percent on the month, after a 0.1 percent fall in June.
The dollar was also helped by month-end rebalancing flows. Stock markets saw huge losses in August with asset managers having to hedge their portfolios and mark down losses in the market value of shares. The UK's FTSE is on track for its biggest monthly fall in August since October 2008.
"Rebalancing of hedges at month-end will see dollar buying against all currencies," said Aroop Chatterjee, analyst at Barclays Capital. "The signal is uniformly of moderate strength." Sterling had scaled a 3-1/2 month high against the dollar on August 19, advancing in spite of data pointing to anaemic growth. That fuelled speculation the Bank of England may resort to another round of quantitative easing to support a recovery.
It also rose to near two-month highs against the euro as investors decided the pound was a relative safe haven from US and eurozone debt concerns and was at less risk from official easing measures than the Swiss franc and the Japanese yen. The euro was last up 0.2 percent versus the pound at 88.56 pence , drawing some support after traders said the European Central Bank was seen buying Italian bonds again on Tuesday. Traders cited offers around 88.80 pence with stop-loss orders above that level. On the downside losses looked to be capped by support from the 55-day moving average at 88.23 pence and 100-day moving average at 88.17.