GBP/USD" title="GBP/USD" width="665" height="452">For the 24 hours to 23:00 GMT, GBP rose marginally against the USD and closed at 1.5838. Gains in the Pound were capped as market sentiment weakened amid talks over the organization of financial aid to banks by the Euro-zone’s bailout fund, the European Stability Mechanism (ESM). Investors remained cautious as Euro-zone ministers were still seeking an agreement on how and when the €500 billion ESM can avoid governments and provide direct help to banks.
Moreover, the Bank of England (BoE) Governor, Sir Mervyn King has called for further action to boost the UK’s ailing economy. In a speech in Belfast, he noted that, much has been done by the government and the bank, but more was needed, particularly to restore confidence in banks. Furthermore, he also warned that, abandoning inflation targeting in Britain would be “irresponsible” and risk a return to the high inflation of the 1970s.
On the economic front, UK’s public sector borrowing declined to £13.2 billion in December, from a revised net borrowing of £14.3 billion recorded in the previous month. Meanwhile, public sector net borrowing excluding financial sector interventions narrowed to £15.4 billion in December, following a net borrowing of £16.5 billion registered in the previous month
In the Asian session, at 04:00 GMT, the pair is trading at 1.5834, with the GBP trading marginally lower from yesterday’s close.
The pair is expected to find support at 1.5800, and a fall through could take it to the next support level of 1.5767. The pair is expected to find its first resistance at 1.5876, and a rise through could take it to the next resistance level of 1.5919.
In the UK, the Bank of England minutes, claimant count change and the ILO unemployment rate are eagerly awaited by investors. Also later today, the UK Prime Minister, David Cameron, will make his long awaited speech on whether his nation would remain a part of the European Union.