Forex - Pound hovers near 1-month highs against dollar

A A A - - The pound remained close to one-month against the U.S. dollar on Friday, as a disappointing U.S. consumer sentiment report weighed on the greenback, while ongoing expectations for the Bank of England to soon raise interest rates continued to support sterling.

GBP/USD hit 1.6991 during U.S. morning trade, the pair's highest since May 7; the pair subsequently consolidated at 1.6955, adding 0.16%.

Cable was likely to find support at 1.6852, the low of May 22 and resistance at 1.6997, the high of May 6.

In a preliminary report, the University of Michigan said its consumer sentiment index fell to 81.2 this month from 81.9 in May, whose figure was revised up from a previously estimated reading of 81.8. Analysts had expected the index to rise to 83.0 in June.

Earlier Friday, official data showed that U.S. producer price inflation fell 0.2% in May, confounding expectations for a 0.1% rise, after a 0.6% increase the previous month.

Core producer price inflation, which excludes food, energy and trade, slipped 0.1% last month, compared to expectations for an increase of 0.1%, after a 0.5% rise in April.

Meanwhile, market sentiment remained under pressure after U.S. President Barack Obama warned of possible military strikes in Iraq after a rebellion led by a Sunni Islamist group continued to spread rapidly through the country.

Demand for the pound was still underpinned by data on Wednesday showing that the U.K. unemployment rate fell to 6.6% in the three months to April, the lowest since early 2009. The consensus forecast had been for a decline to 6.7% from 6.8% in the previous three months.

Earlier in the week, BoE policymaker Ian McCafferty said the bank is moving closer to hiking rates and added that economic data over the coming months would be key in determining the exact timing of a rate increase.

Sterling was higher against the euro, with EUR/GBP shedding 0.24% to 0.7986. 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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