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Forex - GBP/USD edges higher ahead of U.K. data

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Forexpros - The pound edged higher against the U.S. dollar on Tuesday, regaining some of the previous day's sharp losses, while traders awaited key U.K. data on manufacturing production and on its trade deficit.

GBP/USD hit 1.6393 during early European trade, a daily high; the pair subsequently consolidated at 1.6361, gaining 0.25%.

Cable was likely to find support at 1.6227, the low of August 5 and short-term resistance at 1.6475, Monday's high.

The pound dropped sharply against the greenback on Monday, tumbling nearly 1%, as market sentiment was rattled following an historic downgrade of U.S. government debt by ratings agency Standard & Poor's.

Meanwhile, a move by the European Central Bank to purchase Italian and Spanish government bonds failed to ease fears that the debt crisis could spill over to the region's third and fourth largest economies.

U.K. Chancellor of the Exchequer George Osborne said in an interview with the Daily Telegraph on Monday that euro zone nations "must act swiftly" and "do whatever is necessary to ensure financial stability" in the region.

He added that the U.K. government's austerity plan showed that it was possible to "earn credibility and get ahead of the markets through decisive action."

Adding to global concerns, a report from China's National Bureau of Statistics published earlier showed that consumer price inflation rose by a seasonally adjusted 6.5% in July, the fastest pace in three years.

Elsewhere, the pound was fractionally lower against the euro, with EUR/GBP easing up 0.03% to hit 0.8689.

Later in the day, the U.K. was to produce official data on manufacturing production, as well as a report on its trade deficit. Meanwhile, the U.S. was to publish preliminary data on nonfarm productivity and labor costs.

In addition, the Federal Reserve was to announce the federal funds rate. The announcement will be followed by the bank's rate statement, which could provide hints regarding further monetary easing.

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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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