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Forex - GBP/USD rises to fresh 7-month highs on BoE hopes

ForexSep 13, 2013 10:12AM ET
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Investing.com - The pound rose to fresh seven-month highs against the U.S. dollar on Friday, after the release of disappointing U.S. consumer sentiment data, as hopes for the Bank of England to raise interest rates sooner than expected continued to support sterling.

GBP/USD hit 1.5871 during U.S. morning trade; the pair subsequently consolidated at 1.5858, gaining 0.34%.

Cable was likely to find support at 1.5717, Wednesday’s low and resistance at 1.5840, Thursday's high and the highest since early February.

In a preliminary report, the University of Michigan said U.S. consumer sentiment fell to a six-month low of 76.8 in September, from a reading of 82.1 the previous month, confounding expectations for a decline to 82.0.

The report came after official data showed that U.S. retail sales rose 0.2% in August, disappointing expectations for a 0.4% rise, after an upwardly revised 0.4% increase the previous month.

Core retail sales, excluding automobiles, rose 0.1% last month, confounding expectations for a 0.3% gain, after an upwardly revised 0.6% increase in July.

A separate report showed that U.S. producer price inflation rose 0.3% in August, more than the expected 0.2%, after a flat reading the previous month.

Core producer price inflation, excluding food and energy, was flat last month, compared to expectations for a 0.1% rise, after a 0.1% gain in July.

The data came amid growing uncertainty over whether the U.S. central bank will start to unwind its USD85 billion-a-month asset purchase program.

Meanwhile, the pound remained strongly supported after data on Wednesday showed that the U.K. unemployment rate unexpectedly declined to 7.7% in July.

The data reinforced expectations that the BoE would raise interest rates sooner than it has indicated.

Sterling was higher against the euro with EUR/GBP declining 0.59%, to hit 0.8365.

Separately, concerns over Syria persisted as U.S. Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov continued talks on disarming Syria's chemical weapons program.

Commenting on the negociations, Kerry said pledges of Syria's regime to give up its chemical arms were "simply not enough."

Forex - GBP/USD rises to fresh 7-month highs on BoE hopes

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