Forex - GBP/USD gains on U.S. fiscal unease, BoE comments

A A A - The pound strengthened against the dollar on Friday as investors generally steered clear of the greenback to see if U.S. lawmakers can agree on a spending package to avoid a government shutdown in October.

In U.S. trading on Friday, GBP/USD was trading at 1.6137, up 0.60%, up from a session low of 1.6030 and off from a high of 1.6138.

Cable was likely to find support at 1.5980, Wednesday's low, and resistance at 1.6163, the high from Sept. 18.

Congress must approve a spending package by Oct. 1 to avoid a partial government shutdown.

While markets are expecting a last-minute deal, uncertainty steered investors away from the U.S. currency on Friday.

The Democratically-controlled Senate earlier Friday approved a stop-gap spending bill to fund the government through Nov. 15.

The bill was stripped of language defunding President Barack Obama's healthcare reform law, though the legislation will go back to the Republican-controlled House of Representatives, which called for defunding the president's healthcare law in the first place.

Elsewhere, the Thomson Reuters/University of Michigan consumer sentiment index fell to 77.5 in September from a reading of 76.8 the previous month.

Analysts were expecting the index to rise to 78.0 this month.

Separately, official data showed that U.S. personal spending rose 0.3% in August, in line with expectations, after an upwardly revised 0.2% increase the previous month.

Data also showed that personal income in the U.S. rose 0.4% last month as expected after an upwardly revised 0.2% gain in July, also in line with expectations.

Core personal consumption expenditures, which exclude food and energy, rose 0.2% in August, more than the expected 0.1% gain after a 0.1% increase in July.

The data continued to cloud market expectations as to when the Federal Reserve will begin taper its USD85 billion monthly bond-buying program, which weakens the dollar by driving down interest rates to spur recovery.

Meanwhile across the Atlantic, sterling strengthened after Bank of England Governor Mark Carney told the Yorkshire Post that he sees no need for more bond-buying given the signs of recovery in the U.K. economy.

The pound, meanwhile, was up against the euro and down against the yen, with EUR/GBP down 0.36% at 0.8378 and GBP/JPY down 0.31% at 158.35. offers an extensive set of professional tools for the financial markets.
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This article appears in: Investing , Forex and Currencies

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