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Forex - GBP/USD slips with Scotland vote, Fed decision in focus

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Shutterstock photo - - The pound edged lower against the dollar on Tuesday as investors kept a nervous eye towards Thursday's referendum on Scottish independence, while the dollar held steady as investors prepped for the Federal Reserve's statement on monetary policy on Wednesday.

In U.S. trading on Tuesday, GBP/USD was down 0.08% at 1.6219 up from a session low of 1.6162 and off a high of 1.6251.

Cable was likely to find support at 1.6050, last Wednesday's low, and resistance at 1.6644, the high from Sept. 1.

Sterling remained under pressure but came off earlier lows due to uncertainty over the outcome of Thursday's referendum on Scottish independence.

The latest opinion polls on the Scottish referendum have indicated that the outcome of the vote is too close to call.

Concerns over the prospect of a yes vote pounded sterling, as recent polls indicated that support for the yes vote had edged into the lead for the first time since the start of the pro-independence campaign.

Uncertainty over what currency an independent Scotland would use, concerns over how much of the U.K. national debt it would take on and the fate of U.K. oil and military activities have rattled financial markets.

Bank of England Governor Mark Carney warned last week that a currency union between an independent Scotland and the rest of the U.K. would be "incompatible with sovereignty."

Earlier Tuesday, the Office for National Statistics reported that the annual rate of U.K. consumer price inflation slowed to 1.5% last month from 1.6% in July, in line with forecasts.

The reading matched the five-year low seen in May. The slowdown in inflation was mainly due to lower prices for fuel, food and non-alcoholic drinks the ONS said.

Consumer prices inched up 0.4% in August, in line with forecasts.

While the rate of inflation fell, a separate report showed that U.K. house prices rose at the fastest pace in seven years in July.

Average U.K. house prices jumped 11.7% in the year to July, the ONS said, and were up 19.1% in London on a year-over-year basis.

Meanwhile in the U.S., the dollar held steady ahead of the release of the Federal Reserve's Wednesday statement on monetary policy.

Expectations held firm for the U.S. central bank to cut its monthly bond-buying program to $15 billion from $25 billion, though many are hoping to see hints as to when U.S. interest rates may rise.

Many expect to see a first rate hike kick in 2015, though the timing which remains unclear.

Federal Reserve officials have expressed concern about persistent slackness in the U.S. labor market, though some have said rate hikes could come sooner than markets are expecting if the economy continues to improve and keep creating jobs along the way.

Elsewhere on Tuesday, official data showed that U.S. producer price inflation was flat last month, compared to expectations for a 0.1% rise after a 0.1% gain in July.

Core PPI, which excludes food, energy, and trade rose 0.1% in August, in line with expectations, after an increase of 0.2% in July.

Elsewhere, sterling was down against the euro, with EUR/GBP up 0.05% at 0.7976, and down against the yen, with GBP/JPY down 0.09% at 173.85.

On Wednesday, markets will move on the Federal Reserve's statement on monetary policy followed by Fed Chair Janet Yellen's press conference.

Elsewhere, the U.S. is to produce data on consumer prices, while the euro zone is to release revised data on consumer price inflation.

The U.K. is to publish data on the change in the number of people employed and the unemployment rate, as well as data on average earnings. In addition, the Bank of England is to release the minutes of its latest policy meeting. offers an extensive set of professional tools for the financial markets.

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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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