LONDON: Sterling pared losses on Wednesday after a mixed bag of data showed British business investment falling unexpectedly in the third quarter of the year but the economy growing quite healthily overall.
Business investment declined by 0.7 percent between July and September compared with the previous three months, its first fall since the second quarter of last year, while gross domestic product grew by 0.7 percent on the quarter, as expected.
Sterling fell after the data, hitting a day's low of $1.5680 , but soon recovered to trade flat at $1.5726.
"There was a bit of disappointment that the investment numbers were as weak as they were -- the Bank of England is hoping that business investment can be part of the recovery story in the UK," said Daragh Maher, an FX strategist at HSBC.
But Maher added that a slew of data to come from the United States this afternoon -- which includes durable goods numbers and core consumer inflation -- was keeping currency moves subdued, as was the US Thanksgiving holiday on Thursday.
The pound has held up against the dollar in the past week but is still almost 9 percent down from a 2014 peak of close to $1.72, hit in July, frustrated by political risk and the pushing out of rate hike expectations.
On Tuesday, testament to parliament by Bank of England policymakers failed to alter a growing view that interest rates will not rise until late next year, or even in early 2016.
"Our view remains that the re-pricing of the first BoE rate (hike) to November 2015 has gone too far and we still see a Q2 start as more likely," BNP Paribas said in a note.
The euro also briefly strengthened against sterling to 79.50 pence, its highest in five days.
But it quickly gave up those gains to trade 0.3 percent down at 79.16 pence, hit by comments from European Central Bank Vice President Vitor Constancio, who said the ECB could decide on whether to buy sovereign bonds in the first quarter of 2015.
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