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Forex - GBP/USD edges higher ahead of Osborne speech

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Forexpros - The pound was up against the U.S. dollar on Thursday, pulling back from a three-week low as risk sentiment improved after France's top-tier credit rating was affirmed by the major rating agencies, while markets awaited a speech in parliament from U.K. Chancellor George Osborne.

GBP/USD clawed back from 1.6110, the lowest since July 20, to hit 1.6190 during European morning trade, gaining 0.34% on the day.

Cable was likely to find support at 1.6039, the low of July 19 and resistance at 1.6334, Wednesday's high.

Concerns over the health of major French lenders, particularly Societe Generale, as well as rumors of an imminent French sovereign debt downgrade rattled investors' confidence on Wednesday, leading to sharp losses in Europe and on Wall Street.

Rating agencies Moody's, Standard & Poor's and Fitch's later reaffirmed France's top-tier AAA credit rating and said its outlook was stable.

Meanwhile, U.K. Chancellor of the Exchequer George Osborne was to address parliament later Thursday, following the recent turmoil in financial markets and the Bank of England's downgrade of its U.K. growth forecast on Wednesday.

In its quarterly inflation report, the Bank of England cut its year-end growth forecast to just below 2.0% from 2.5% at the time of its May inflation report, saying that economic growth was likely to remain "sluggish" in the near term.

The BoE also said that it expected inflation to ease towards its 2% annual target by the end of 2012 and dip slightly below target in 2013.

The statement added to the view that the central bank would keep rates at a record low for a longer period, while also reaffirming expectations the bank could introduce further easing measures if the economy deteriorated.

Elsewhere, the pound was down against the euro, with EUR/GBP gaining 0.27% to hit 0.8813.

Later in the day, the U.K. was to release industry data on a leading index designed to predict the direction of the economy, while the U.S. was to release official data on its trade balance, as well as a government report on initial jobless claims and natural gas stockpiles.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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