Forex Pros — The euro extended gains against the pound on Tuesday, rising to a seven-day high after Bank of England policymaker Paul Fisher defended the bank’s stance on low interest rates, despite above-target inflation.
EUR/GBP hit 0.8870 during European morning trade, the pair’s highest since June 10; the pair subsequently consolidated at 0.8857, gaining 0.34%.
The pair was likely to find support at 0.8769, Friday’s low and resistance at 0.8922, the high of June 10.
Speaking in London earlier, Fisher, the bank’s executive director for markets, said the central bank’s Monetary Policy Committee was determined to bring inflation, currently at 4.5%, back to its 2% target over the next two or three years.
But he added there are risks of both worsening inflation and weak growth leading to deflation.
“The MPC are trying to set the best path back to the inflation target, but even the best path is an extremely uncomfortable one,” he said.
Also Tuesday, official data showed that the U.K. public sector borrowing fell in May, to GBP15.1 billion from GBP16.4 billion pounds in May 2010, just below economists’ forecast’s for borrowing of GBP15.7 billion.
The pound was also down against the U.S. dollar, with GBP/USD slipping 0.16% to hit 1.6175.
Later in the day, Greek Prime Minister George Papandreou was to face a critical confidence vote in his newly appointed government, ahead of a vote next week on unpopular spending cuts and economic reforms.
ForexPros.com
