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Forex - GBP/USD hits 1-month high, gains capped by E.Z. uncertainty

Published 07/27/2012, 07:24 AM
Updated 07/27/2012, 07:25 AM
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Investing.com - The pound rose to a one-month high agains the U.S. dollar on Friday, as hopes for progress in tackling the euro zone's debt crisis continued to support risk sentiment, while markets eyed the release of highly anticipated U.S. data on second quarter economic growth.

GBP/USD hit 1.5746 during European afternoon trade, the pair's highest since June 20; the pair subsequently consolidated at 1.5723, rising 0.24%.

Cable was likely to find support at 1.5612, the low of July 20 and resistance at 1.5848, the high of May 22.

Sterling remained supported after European Central Bank President Mario Draghi said on Thursday that the bank will do whatever is necessary to preserve the euro.

In a speech in London, Draghi appeared to indicate that the ECB would be prepared to intervene to lower Spanish and Italian bond yields, saying that government borrowing costs would fall within the central bank’s mandate if they interfered with the 'transmission' of monetary policy.

Gains were limited however by fresh doubts over the ECB's ability to take bold measures to tackle the sovereign debt crisis.

Meanwhile, the greenback remained under pressure as investors were eyeing data on second quarter U.S. gross domestic product later in the day, after a string of mixed economic reports on Thursday sparked fresh expectations for further easing measures by the Federal Reserve.

Elsewhere, the pound was fractionally higher against the euro with EUR/GBP inching down 0.08%, to hit 0.7823.

Also Friday, official data showed that Spain's unemployment rate rose slightly less-than-expected in the second quarter, ticking up to 24.6% from 24.4% in the previous quarter. Analysts had expected Spain's unemployment rate to rise to 24.9% in the second quarter.

Later in the day, the U.S. was to publish advanced data on second quarter gross domestic product followed by a report by the University of Michigan on consumer sentiment.
 

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