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Forex - GBP/USD gains on hawkish Carney comments

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Investing.com -

Investing.com - The pound firmed against the dollar on Monday after Bank of England Governor Mark Carney said over the weekend that interest rates could rise sooner than many have been expecting.

In U.S. trading on Monday, GBP/USD was trading up 0.18% at 1.6722 up from a session low of 1.6712 and off a high of 1.6738.

Cable was likely to find support at 1.6658, Thursday's low, and resistance at 1.6796, the high from Aug. 11.

The pound strengthened broadly after Bank of England Governor Mark Carney said over the weekend that interest rates could rise before wage growth picks up.

In a newspaper interview published on Sunday, Carney said that the bank did not have to wait for wage growth to recover before raising interest rates, shifting away from comments last week indicating the opposite.

Last week, the pound slumped after the Bank of England cut its forecast for wage growth to 1.25% from 2.5% in 2014, before picking up to 3.25% in 2015.

The dollar, meanwhile, found some support on upbeat U.S. housing data.

The National Association of Home Builders/Wells Fargo Housing Market Index increased to 55.0 in August, a seven-month high, from 53.0 in July, beating estimates for a reading of 53.0.

A level above 50.0 indicates a favorable outlook on home sales and below indicates a negative outlook.

"As the employment picture brightens, builders are seeing a noticeable increase in the number of serious buyers entering the market," said NAHB Chairman Kevin Kelly.

Waning fears that the Russian-Ukraine conflict will escalate also supported the greenback.

Russian and Ukraine foreign ministers were set to meet later in the day, which sparked hopes that diplomats will reach a breakthrough to ease geopolitical tensions in the region.

Elsewhere, sterling was up against the euro, with EUR/GBP down 0.49% at 0.7990, and up against the yen, with GBP/JPY up 0.39% at 171.52.

On Tuesday, the U.K. is to produce data on consumer inflation, which accounts for the majority of overall inflation.

The U.S. is to release reports on building permits, housing starts and consumer inflation as well.

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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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