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Forex - GBP/USD dips as U.S. retail sales point to end of Fed stimulus
ForexAug 13, 2013 03:13PM ET
Investing.com - The dollar traded higher against the yen on Tuesday after data revealed U.S. retail sales expanded for a fourth consecutive month in July and renewed expectations for the Federal Reserve to begin tapering stimulus measures later this year.
Stimulus tools such as the Fed's USD85 billion monthly bond-buying program weaken the dollar to spur recovery, and talk of their dismantling can strengthen the greenback.
In U.S. trading on Tuesday, was trading at 1.5446, down 0.11%, up from a session low of 1.5428 and off from a high of 1.5512.
Cable was likely to find support at 1.5207, Wednesday's low, and resistance at 1.5574, Thursday's high.
The Commerce Department reported earlier that retail sales rose by 0.2% in July, slightly below expectations for a 0.3% increase though an expansion nonetheless.
Retail sales figures for June were revised up to a 0.6% gain from a previously reported increase of 0.4%, the U.S. government added.
Core retail sales, which are stripped of automobile sales, rose at their fastest pace in seven months, expanding 0.5% compared to forecasts for a 0.4% gain.
The numbers prompted investors to trade on expectations that the Fed will begin tapering its monthly bond purchases either in September or in December and wrap up the program in 2014.
The dollar's gains did see headwinds after Federal Reserve Bank of Atlanta President Dennis Lockhart said the Fed still does not have enough data to decide whether tapering stimulus programs should begin in September.
Meanwhile across the Atlantic, the U.K. consumer prices index ticked down to 2.8% on a year-over-year basis from 2.9% in June, according to official data, in line with market expectations.
The pound, meanwhile, was up against the euro and up against the yen, with down 0.20% at 0.8585 and up 1.25% at 151.71.
On Wednesday, the U.S. is to release official data on producer price inflation.
The U.K. is to release official data on the change in the number of people unemployed and the unemployment rate, as well as data on average earnings.
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