Forexpros – The pound edged up against the U.S. dollar on Monday, to trade close to an eight-month high as Friday’s disappointing U.S. first quarter growth data continued to weigh on the greenback, but sterling’s gains were limited in cautious trade.
GBP/USD hit 1.6297 during early European trade, the pair’s highest since August 31; the pair subsequently consolidated at 1.6283, easing up 0.13%.
Cable was likely to find support at 1.6152, Friday’s low and resistance at 1.6422, the high of August 30.
The Commerce Department said gross domestic product in the U.S. expanded at a rate of 2.2% in the three months to March, below expectations for a 2.5% increase.
The disappointing data fuelled speculation that the Federal Reserve may implement a fresh round of monetary stimulus measures after Fed chief Ben Bernanke left open the possibility following the bank’s monetary policy meeting last week, saying policymakers were “prepared to do more” if necessary.
But investors remained cautious as concerns over the outlook for Spain continued after official data confirmed that the country’s economy entered a recession in the first quarter, with gross domestic product contracting by 0.3% in the three months to March.
On Thursday, ratings agency Standard & Poor’s cut Spain’s long-term credit rating by two notches, saying that the recession will undermine government efforts to reduce one of the largest budget deficits in the single currency bloc.
The pound remained supported despite official data last week showing that the U.K. economy entered a recession in the first quarter, as investors continued to view sterling as a safe alternative to the euro.
The pound advanced to a fresh 22-month high against the euro, with EUR/GBP shedding 0.21% to hit 0.8130.
Later in the day, the U.S. was to publish official data on core personal consumption expenditures price inflation and personal spending, as well as a report on business activity in Chicago.
Forexpros
