Investing.com - The pound was almost unchanged against the dollar in sluggish trade on Monday as investors awaited Federal Reserve minutes later in the week, while signs that a major U.K. merger deal will fail looked likely to weigh on sterling.
GBP/USD was trading at 1.6820, up fractionally from 1.6812 late Friday.
Cable was likely to find support at 1.6750 and resistance at 1.6873, the high of May 14.
Sterling’s strong performance this year has been boosted by talk of a merger between U.K. drug company Astrazeneca (LONDON:AZN) and one of the world’s largest pharmaceutical companies, Pfizer Inc (NYSE:PFE).
The merger looked likely to fail after AstraZeneca said Monday that it had rejected a final offer from Pfizer, saying the increased bid failed to recognize its full value.
Demand for the pound continued to be underpinned by expectations that the Bank of England will raise interest rates ahead of other central banks as the recovery in the U.K. continues to deepen.
Investors remained cautious as they looked to the minutes from the Fed’s latest monetary policy meeting, due for release on Wednesday, for insight on the central bank's view of the economy.
Data on Friday showed that U.S. housing starts recorded the largest increase in five months in April, indicating that the economy is shaking off the effect of a weather related slowdown over the winter.
However, the upbeat housing data was overshadowed by a report showing that consumer confidence in the U.S. deteriorated this month.
Elsewhere Monday, the euro edged higher against the pound. EUR/GBP eased 0.11% to 0.8155, but was still close to last week’s 16-month trough of 0.8125.
The euro’s gains looked likely to remain limited amid growing expectations for fresh monetary easing by the European Central Bank at its next meeting in June, to safeguard the recovery in the euro zone and stop inflation from falling too low.
Recent comments by ECB officials have indicated that the bank is open to easing and is prepared to act swiftly if necessary.
Data late last week showing that the euro zone economy grew at a slower than expected rate in the first three months of the year added to pressure on the bank to act.