Investing.com - The pound rose to session highs against the dollar on Monday, as uncertainty over the direction of U.S. monetary policy lingered after the Federal Reserve’s surprise decision last week to announce no reduction to its stimulus program.
GBP/USD hit 1.6060 during European afternoon trade, the session high; the pair subsequently consolidated at 1.6055, gaining 0.32%.
Cable was likely to find support at 1.5985, Friday’s low and resistance at 1.6150, Thursday’s high and an eight month high.
The dollar remained under pressure after the Fed said it wanted to see more evidence of a sustained economic recovery before it adjusted the scale of its bond buying program.
The decision surprised markets, which had been expecting the U.S. central bank to cut its USD85 billion-a-month stimulus program by USD10 billion to USD15 billion.
The greenback found some support after St. Louis Federal Reserve President James Bullard said Friday the decision not to taper in September was “close” and indicated that there could be a small reduction in bond purchases in October.
Elsewhere, sterling rose to session highs against the euro, with EUR/GBP down 0.38% to 0.8417.
The euro weakened after data released on Monday showed that manufacturing output in the euro zone was weaker than expected this month, but this was offset by an improvement in service sector activity.
The preliminary reading of the euro zone manufacturing purchasing managers’ index fell to 51.1 in September from a final reading of 51.4 in August. Analysts had expected the index to inch up to 51.8.
However, the euro zone services PMI rose to 52.1, the highest level since June 2011, from 50.7 in August and above expectations for a reading of 51.1.
Germany’s manufacturing PMI fell to 51.3 in September from a final reading of 51.8 in August, compared to expectations for an improvement to 52.2.
The German services PMI rose to a seven month high of 54.4 from a reading of 52.8 in August. Analysts had expected the index to tick up to 53.1
Demand for the euro was also underpinned after German Chancellor Angela Merkel's conservative party won general elections on Sunday, securing her a historic third term in office. Political party leaders were due to meet later Monday to discuss coalition talks.
GBP/USD hit 1.6060 during European afternoon trade, the session high; the pair subsequently consolidated at 1.6055, gaining 0.32%.
Cable was likely to find support at 1.5985, Friday’s low and resistance at 1.6150, Thursday’s high and an eight month high.
The dollar remained under pressure after the Fed said it wanted to see more evidence of a sustained economic recovery before it adjusted the scale of its bond buying program.
The decision surprised markets, which had been expecting the U.S. central bank to cut its USD85 billion-a-month stimulus program by USD10 billion to USD15 billion.
The greenback found some support after St. Louis Federal Reserve President James Bullard said Friday the decision not to taper in September was “close” and indicated that there could be a small reduction in bond purchases in October.
Elsewhere, sterling rose to session highs against the euro, with EUR/GBP down 0.38% to 0.8417.
The euro weakened after data released on Monday showed that manufacturing output in the euro zone was weaker than expected this month, but this was offset by an improvement in service sector activity.
The preliminary reading of the euro zone manufacturing purchasing managers’ index fell to 51.1 in September from a final reading of 51.4 in August. Analysts had expected the index to inch up to 51.8.
However, the euro zone services PMI rose to 52.1, the highest level since June 2011, from 50.7 in August and above expectations for a reading of 51.1.
Germany’s manufacturing PMI fell to 51.3 in September from a final reading of 51.8 in August, compared to expectations for an improvement to 52.2.
The German services PMI rose to a seven month high of 54.4 from a reading of 52.8 in August. Analysts had expected the index to tick up to 53.1
Demand for the euro was also underpinned after German Chancellor Angela Merkel's conservative party won general elections on Sunday, securing her a historic third term in office. Political party leaders were due to meet later Monday to discuss coalition talks.