The dollar held most of its recent gains against major rivals on Wednesday, but came under renewed pressure versus the sterling after data confirmed the U.K. economy is getting back on track.
U.K. GDP rose 0.5 in the first three months of the year, following a dismal fourth quarter that saw the British economy contract by the same amount.
The news raised speculation that the Bank of England may hike interest rates in an bid to fight off inflation.
Later, traders were presented with yen another troubling look at the U.S. economy.
New orders for manufactured durable goods decreased sharply in April, reversing a better than previously estimated increase in orders in March, according to a Commerce Department report released Wednesday.
The report showed that durable goods orders dropped 3.6 percent, or $7.1 billion, to $189.9 billion in April, a steeper decline than the 3 percent drop expected by most economists.
Recent manufacturing data has suggested a slowdown in factory activity — one of the few bright spots during the sluggish economic recovery.
The dollar dropped to $1.6280 versus the sterling, more than 2 cents from a 2-month peak set earlier this week.
The buck was stable versus the euro, holding near $1.4060. The dollar hit a 2-month best of $1.3968 on Monday, with the euro saddled with still unanswered questions about the Greek debt crisis.
Germany’s consumer sentiment is set to fall again in June after easing for two straight months as worsening debt crisis in Greece and high energy prices overshadowed falling unemployment and robust economic growth.
The overall consumer confidence indicator is forecasting a value of 5.5 points for June, down from 5.7 points in May, survey results from the market research group GfK showed Wednesday.
There was little movement against the yen, leaving the dollar in a narrow range near Y82.