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Forex - GBP/USD extends gains, hits 3-month highs

ForexSep 09, 2013 10:25AM ET
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Investing.com - The pound extended gains on Monday, to trade near three-month highs as lessened expectations for the Federal Reserve to begin scaling back its stimulus program this month continued to weigh on demand for the greenback.

GBP/USD hit 1.5732 during U.S. morning trade, the pair's highest since June 17; the pair subsequently consolidated at 1.5723, gaining 0.59%.

Cable was likely to find support at 1.5574, the low of September 5 and resistance at 1.5752, the high of June 17.

Data on Friday showed that the U.S. economy added 169,000 jobs in August, fewer than the 180,000 forecast by economists and jobs growth for the two previous months was also revised lower.

The report raised some doubts over whether the Fed will start to unwind its USD85 billion-a-month asset purchase program at its upcoming policy meeting on September 17-18.

Meanwhile, market sentiment remained supported after improved trade data out of China over the weekend added to indications that the world’s second largest economy is recovering from a slowdown.

Data on Sunday showed that Chinese exports were 7.2% higher year-over-year in August, up from 5.1% in July, and imports were up 7%.

Data released on Monday showed that Chinese consumer price inflation was up 2.6% year-on-year in August, in line with expectations.

In the U.K., Chancellor George Osborne said in a speech on Monday that the economy is “turning a corner”, but added that risks to the recovery still remained.

Sterling was higher against the euro with EUR/GBP edging down 0.18%, to hit 0.8418.

In the euro zone, a report showed that the Sentix index of euro zone investor confidence rose to a six month high of 6.5 in September, up from minus 4.9 last month. Analysts had forecast a reading of minus 2.8.

Forex - GBP/USD extends gains, hits 3-month highs

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