Forex - Pound steady at 8-month highs vs. dollar

Shutterstock photo - The pound was steady close to eight-month highs against the dollar on Monday as the prospect of the U.S. government shutting down weighed on dollar demand.

GBP/USD hit 1.6182 during European morning trade, the highest since early January; the pair subsequently consolidated at 1.6156, easing up 0.10%.

Cable was likely to find support at 1.6100 and resistance at 1.6250.

Political wrangling in Washington over funding for President Barack Obama's healthcare law continued over the weekend, fuelling fears over a possible government shutdown.

Congress must pass a short-term budget by midnight on Monday in order to keep the government open.

Republican opposition to the funding of the Affordable Care Act has created a standoff with the White House and the Democratic-controlled Senate, which have both said they will not support any budget bill that defunds or amends Obamacare.

Market sentiment was also hit after data on Monday showed that China's HSBC manufacturing index was revised down to 50.2 from an initial reading of 51.2 this month, indicating that the recovery in the world's second largest economy remains fragile.

Economists had expected an unchanged reading.

Demand for sterling continued to be underpinned after Bank of England Governor Mark Carney said last week that he did not see a case for further quantitative easing.

The pound showed little reaction after data released on Monday showed that U.K. net lending rose in line with expectations in August, while mortgage approvals rose more than expected.

Elsewhere, the euro was trading close to eight-month lows against the pound, with EUR/GBP down 0.20% to 0.8362 as concerns over political instability in Italy weighed.

Silvio Berlusconi announced Saturday that he was pulling his ministers out of Prime Minister Enrico Letta's coalition government and called for fresh elections to be held. 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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