Investing.com - The pound rose to fresh five-and-a-half year
highs against the U.S. dollar on Tuesday, following dovish comments
by Federal Reserve Chairwoman Janet Yellen and as earlir U.K. data
continued to support.
GBP/USD hit 1.7192 during U.S. morning trade, the pair's highest
since October 2008; the pair subsequently consolidated at 1.7156,
Cable was likely to find support at 1.7060, the session low and
resistance at 1.7874.
Ms. Yellen said the U.S. economy is continuing to improve but
added that the recovery is not yet complete. She said that
considerable slack still remains in the labor market and wage
growth remains weak.
The remarks came during testimony to the Senate Banking
Committee in Washington.
The Fed chair reiterated that rates are likely to remain on hold
for a considerable period after the bank's quantitative easing
Interest rates could rise sooner more quickly if the labor
market was to improve more quickly than expected she said, but
added that if the economic recovery is disappointing interest rates
would remain accommodative.
Yellen's comments came after the Commerce Department reported
that U.S. retail sales rose just 0.2% in June, below forecasts for
a 0.6% increase. Retail sales for May were revised up to 0.5% from
a previously reported 0.3%.
A separate report showed that manufacturing activity in New York
state rose to a four year high this month. The Empire state
manufacturing index rose to 25.6 from 19.3 in June. Analysts had
expected the index to decline to 17.0.
The pound strengthened earlier, after the Office for National
Statistics reported that consumer prices rose 1.9% on a
year-over-year basis in June, accelerating from 1.5% in May and
well above expectations of 1.6%.
Consumer prices ticked up 0.2% last month, the ONS said,
compared to estimates of a 0.1% decline.
A separate report showed that the house price index climbed
10.5% in the year to May from 9.9% in the year to April.
The upbeat data added to signs that the economic recovery in the
U.K. is deepening, bolstering expectations that the Bank of England
will raise interest rates before the end of the year.
Sterling was also higher against the euro, with EUR/GBP
declining 0.75% to 0.7912.
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