Forexpros – The pound edged higher against the U.S. dollar in thin trade on Monday, as market sentiment was boosted by solid demand at an auction of Italian government debt, but the pound’s gains looked set to remain limited ahead of a barrage of U.K. economic data later in the week.
GBP/USD hit 1.5710 during European afternoon trade, the pair’s highest since July 31; the pair subsequently consolidated at 1.5696, easing up 0.06%.
Cable was likely to find support at 1.5604, last Thursday’s low and resistance at 1.5749, the high of July 30.
Italy saw borrowing costs rise only slightly after it auctioned the full targeted amount of EUR8 billion of 12-month government bonds at an average yield of 1.69%, up from 1.55% previously.
But the pound remained under pressure amid fears that weak economic data later this week could prompt the Bank of England to implement more easing measures to spur growth.
The pound found support last week after BoE Governor Mervyn King indicated that the central bank was unlikely to cut rates soon, saying it would be counterproductive.
But the outlook for sterling deteriorated after the BoE said that the U.K. economy would barely grow this year and cut its forecasts for the coming years in Wednesday’s quarterly inflation report.
The U.K. was to release data on retail sales, employment and inflation later in the week, while the BoE was to publish the minutes of its August policy meeting, which could indicate how soon more easing measures may be introduced.
Meanwhile, weak data out of Japan earlier fuelled expectations that world central banks will implement more easing measures to spur the economic recovery.
Official data showed that Japan’s economy grew just 0.3% in the three months to June, half as much as expectations for a 0.6% expansion, from an upwardly revised 1.2% in the first quarter, as export demand was hit by the debt crisis in the euro zone.
The pound was lower against the euro, with EUR/GBP up 0.35% to 0.7861.
Trade looked likely to remain subdued on Monday, with no significant economic data releases on the calendar, while volumes were light with many market participants on summer holidays.
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