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Forex - GBP/USD moves higher as BoE rate hike outlook supports

Published 03/07/2011, 04:15 AM
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Investing.com – The pound was higher against the U.S. dollar on Monday, as rising oil prices and expectations that the Bank of England will raise interest rates ahead of the U.S. Federal Reserve supported the pound.

GBP/USD hit 1.6300 during European morning trade, the daily high; the pair subsequently consolidated at 1.6293, rising 0.14%.

Cable was likely to find support at 1.6213, last Wednesday’s low and resistance at 1.6343, last Wednesday’s high and a 13-month high.

On Friday, the U.S. non-farm payrolls report showed an increase of 192,000 jobs as private employers hired 222,000 workers, the most since April. The unemployment rate unexpectedly dipped to 8.9%, the lowest since April 2009, from 9.0% in January.

While better-than-expected, the data disappointed some investors who see strong U.S. jobs growth as necessary for the Federal Reserve to end its second round of quantitative easing and raise interest rates.

Meanwhile, some BoE policymakers have argued that there is a strong case for raising interest rates as inflation has been well above the banks 2% target for more than a year, and is forecast to near 5% in the coming months.

The pound was also up against the euro, with EUR/GBP slipping 0.10% to hit 0.8588.

Earlier in the day, rating agency Moody's downgraded Greece's sovereign rating to B1 from Ba1 and assigned it a negative outlook.


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