Forexpros – The pound was higher against the U.S. dollar on Monday, as market sentiment recovered after a pledge by French and German leaders to present new measures to tackle the financial crisis in the euro zone.
GBP/USD hit 1.5624 during early European trade, the pair’s highest since September 30; the pair subsequently consolidated at 1.5657, rising 0.64%.
The pair was likely to find support at 1.5421, the low of October 7 and resistance at 1.5715, the high of September 29.
The pound tracked the euro’s gains after German Chancellor Angela Merkel and French President Nicolas Sarkozy announced on Sunday a plan to counter the effects of the debt crisis in the single currency bloc.
Due to be unveiled by the end of the month, the measures are reported to include plans for the recapitalization of European banks and ways to deepen the coordination of budget policies between the 17 euro zone members.
But sterling remained vulnerable after the Bank of England launched fresh monetary stimulus measures to shore up the U.K. economy, which has come under pressure from government spending cuts, a slowdown in global growth and the deepening financial crisis in the euro zone.
Elsewhere, the pound was lower against the euro with EUR/GBP climbing 0.85%, to hit 0.8671.
Also Monday, troubled Franco-Belgian lender Dexia agreed to the nationalization of its Belgian banking division, following fears that it could go bankrupt.
Ratings agency Moody’s has warned that the burden of bailout out the bank could lead to a ratings downgrade on Belgian government bonds.
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