Investing.com - The pound edged higher against the U.S. dollar on Monday, after downbeat U.S. new home sales data but gains were expected to remain limited as Friday's comments by Federal Reserve Chair Janet Yellen continued to support the greenback.
GBP/USD hit 1.6599 during U.S. morning trade, the pair's highest since August 21; the pair subsequently consolidated at 1.6591, adding 0.12%.
Cable was likely to find support at 1.6546, the session low and a five-month low and resistance at 1.6679, the high of August 20.
In a report, the U.S. Commerce Department said new home sales dropped by 2.4% to 412,000 units last month, compared to expectations for an increase of 5.7% to 430,000.
New home sales in June were revised up to 422,000 units from a previously reported 406,000 units.
The dollar remained broadly supported after Fed Chair Janet Yellen said on Friday that the U.S. economy is recovering and added the labor market is improving as well.
Ms. Yellen was speaking at the Fed's annual meeting of top central bankers and economists in Jackson Hole, Wyoming.
Sterling was higher against the euro, with EUR/GBP retreating 0.42% to 0.7958.
Also Monday, the German research institute Ifo said its Business Climate Index fell to a more than one-year low of 106.3 this month, below forecasts for 107.0 and down from a reading of 108.0 in July.
The weak data dampened optimism over the health of the euro zone’s largest economy.
The single currency also came under pressure after European Central Bank President Mario Draghi told the Jackson Hole gathering on Friday that the central bank is ready to take more unconventional action if needed to stimulate a sluggish euro zone economy.