Forex - GBP/USD edges lower as focus remains on BoE meeting

Published 07/03/2012, 08:05 AM
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Investing.com - The pound edged lower against the U.S. dollar on Tuesday, as markets were jittery amid expectations for further easing measures by world central banks, including the Bank of England, due to hold a policy-setting meeting later this week.

GBP/USD hit 1.5673 during European afternoon trade, the daily low; the pair subsequently consolidated at 1.5670, edging down 0.14%.

Cable was likely to find support at 1.5614, the low of June 19 and resistance at 1.5776, the high of June 20 and a one-month high.

On Monday, a report showed that the U.S. manufacturing sector had contracted for the first time since July 2009 in June.

The weak data fuelled speculation that the Federal Reserve may implement a third round of quantitative easing to support economic growth, which has been hit by the ongoing debt crisis in the euro zone.

Earlier Tuesday, data showed that construction activity in the U.K. fell at the fastest rate in two-and-a-half years in June, as output and new orders both fell.

Markit and the Chartered Institute of Purchasing & Supply said the construction purchasing managers' index fell to 48.2 in June, from a reading of 54.4 in May, its lowest reading since December 2009 below the 50 level which separates growth from contraction.

Analysts had forecast a more modest decline to 53.0.

The weak data added to speculation that the BoE will implement a fresh round of stimulus measures at Thursday’s meeting, after data on Monday showed that the U.K. manufacturing sector contracted for a second successive month in June.

Elsewhere, the pound was lower against the euro with EUR/GBP adding 0.20%, to hit 0.8030.

Also Tuesday, official data showed that net lending to individuals in the U.K. fell less-than-expected in May.

The BoE said total net lending declined to GBP1.3 billion in May from GBP1.4 billion the previous month, missing expectations for a decline to GBP1.1 billion.

Later in the day, the U.S. was to release official data on factory orders.


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