Forex Pros – The pound pulled back from a three-day high against its U.S. counterpart on Monday, as U.K. Chancellor George Osborne was forced to defend his deficit-cutting plan after a group of economists said the pace of cutbacks was putting the recovery at risk.
GBP/USD retreated from 1.6459, the pair’s highest since June 1 to hit 1.6421 during early European trade, dipping 0.03%.
Cable was likely to find support at 1.6304, last Thursday’s low and resistance at 1.6511, the high of May 30.
The Chancellor defended the Coalition’s plans to cut the deficit and said it was the “rock” that had to be created to ensure the U.K.’s economic credibility.
“We have flexibility built into our plan. But what our plan provides is credibility where there was no credibility, stability where there was no stability, confidence that actually the British economy is getting its act together,” he said.
His comments came after a group of economists cast doubt on the Chancellor’s strategy, pointing out that economic growth is still worryingly low.
Meanwhile, the pound inched higher against the euro, with EUR/GBP slipping 0.07% to hit 0.8903.
Later in the day, the International Monetary Fund was to announce the results of its latest analysis of the state of the U.K.’s finances.
Also Monday, Philadelphia Federal Reserve Bank President Charles Plosser and Dallas Fed President Richard Fisher were scheduled to speak. Their comments would be closely watched for their views on the U.S. economic recovery.
ForexPros.com
