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Forex - Pound steady after rebound from 10-month lows

Published 09/11/2014, 02:41 AM
Updated 09/11/2014, 02:41 AM
Pound steady but more volatility seen ahead

Investing.com - The pound was steady against the dollar on Thursday after rebounding from 10-month lows in the previous session, but nerves over the prospect of Scottish independence looked likely to keep sterling volatile.

GBP/USD was last trading at 1.6201, dipping 0.06% on the day. On Wednesday the pair fell to lows of 1.6050, the weakest since November, before recovering to 1.6208 in late trade.

Cable was likely to find support at 1.6100 and resistance at around the 1.6280 level.

The pound rebounded after a new opinion poll on Scottish independence on Wednesday showed that support for the no campaign was back in the lead with 53% of voters.

The poll came after a number of recent polls indicated that support for Scottish pro-independence voters had increased ahead of the September 18 referendum.

Uncertainty over what currency an independent Scotland would use, as well as concerns over how much of the U.K. national debt it would take on have sparked a broad based selloff in sterling in the past week.

Sterling had risen to intra-day highs earlier Wednesday after Bank of England Governor Mark Carney indicated that U.K. interest rates are likely to rise in the coming months.

Speaking in front of Parliament’s Treasury committee Carney told MP’s that the point at which interest rates will need to rise has moved closer.

He also said the BoE has a contingency plan to support financial stability in the U.K. if Scotland votes for independence.

Demand for the dollar continued to be underpinned by expectations for an early hike in U.S. interest rates. A study by the San Francisco Fed published on Monday indicated that central bank officials see rates rising sooner than markets expect.

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The Fed was expected to cut its asset purchase program by another $10 billion at its upcoming policy meeting next week which would keep it on track for winding up the program in October, and to start raising interest rates sometime in mid-2015.

Elsewhere sterling edged higher against the euro, with EUR/GBP dipping 0.06% to 0.7962, off Wednesday’s three month highs of 0.8065.

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