Forex - GBP/USD higher but gains capped as BoE easing fears weigh

Published 10/16/2012, 09:13 AM
GBP/USD
-
EUR/GBP
-
Investing.com - The pound extended modest gains against the U.S. dollar on Tuesday on the back of speculation over a ‘soft’ bailout for Spain, but trailed a broad-based risk rally as concerns over the prospects for more easing by the Bank of England weighed.

GBP/USD hit 1.6132 during European afternoon trade, the pair’s highest since October 18; the pair subsequently consolidated at 1.6123, gaining 0.33%.

Cable was likely to find support at 1.6059, the session low and near-term resistance at 1.6141, the high of October 18.

Markets rallied after two senior German lawmakers indicated that they would support a Spanish application for a ‘precautionary credit line’ from the European Stability Mechanism, the euro zones permanent bailout fund.

On Monday, Spanish government officials said they were exploring the option of requesting a credit line from the ESM, in order to satisfy the terms of the European Central Bank’s bond buying program, but then not using it, instead waiting for borrowing costs to fall.

But the pound remained under pressure after U.K. data showing a slowdown in consumer inflation last month left the BoE leeway to ease monetary policy further.

The Office for National Statistics said Tuesday the annualized rate of consumer price inflation dropped to 2.2% in September, the lowest since November 2009, down from 2.5% in August.

Investors were looking ahead to U.K. data on employment and retail sales, as well as BoE minutes later in the week.

The pound fell to a one-month low against the euro, with EUR/GBP up 0.45% to 0.8094.

Later in the day, the U.S. was to release government data on industrial production.


Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2025 - Fusion Media Limited. All Rights Reserved.