Forexpros – The pound remained close to a five-month high against the U.S. dollar on Tuesday, supported by diminished expectations for further easing by the Bank of England, but gains were limited as euro zone debt concerns persisted.
GBP/USD hit 1.6164 during European afternoon trade, the pair’s highest since October 31; the pair subsequently consolidated at 1.6146, adding 0.09%.
Cable was likely to find support at 1.6075, Monday’s low and resistance at 1.6252, the high of September 2.
Official data showed earlier that public sector borrowing in the U.K. rose more-than-expected last month, while the country’s debt-to-GDP ratio rose to a record high 8.3%.
The Office for National Statistics said public borrowing rose to GBP18.17 billion in March, from GBP17.95 billion a year ago, higher than expectations for an increase to GBP14.4 billion.
The pound remained supported by diminished expectations for another round of monetary easing by the Bank of England, while recent robust economic data indicated that the economic recovery is strengthening.
But investors remained cautious after an auction of Spanish short term government debt saw the country’s borrowing costs almost double, while Italy’s borrowing costs rose to the highest level since January after an auction of government bills.
Market sentiment was supported however after The Netherlands successfully auctioned EUR1.99 billion of two and 25-year government bonds.
The results of the auction were closely watched amid fears that the country could lose its triple-A credit rating following the collapse of the government on Monday after talks on the 2013 austerity budget failed.
Elsewhere, the pound was trading close to a 20-month high against the euro with EUR/GBP edging down 0.01%, to hit 0.8155.
Later in the day, the U.S. was to release an industry data on house price inflation, as well a report on consumer confidence and government data on new home sales.
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