Investing.com – The pound pared some of its losses Monday against the dollar after falling to a two-and-a-half-week lows as softer U.K. economic data strengthened expectations for a Bank of England rate cut. But an analyst said traders should "buy the dip."
GBP/USD fell 0.50% to $1.2994, but had been as low as $1.2961 after data showed unexpected weakness in U.K. industrial production and GDP data in November.
The data followed remarks by Bank of England monetary policy member Gertjan Vlieghe Vlieghe, who said he stood ready to back a rate cut if economic growth failed to improve.
But BMO analyst Stephen Gallo suggested investors "buy the dip" as concerns about weak U.K. economic data are overdone.
The weaker U.K. economic data are already "old news" and a potential rate cut could see an "even larger" rebound in sterling on any increased fiscal spending, Gallo said.
EUR/USD rose 0.19% to $1.1141, with some touting further gains for the single currency on expectations for a hawkish pivot from the European Central Bank.
"We see the risk of a hawkish ECB surprise later in the year and generally see other risks as skewed to the downside for USD," Bank of America said in a note.
The bounce from lows in cable and the slight uptick in the euro, kept the dollar roughly flat.
The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, fell by 0.03% to 97.05.
Downside in the greenback, however, was limited by an ongoing decline in the yen on falling demand for safe havens as sentiment on U.S.-China relations continued to improve ahead of the conclusion of their phase one trade deal later this week.
The White House plans to lift its designation of China as a currency manipulator, Bloomberg reported, citing people familiar with the matter.
USD/JPY rose 0.42% to Y109.92, while USD/CAD was flat at C$1.3046.