Sunday, 17 August 2014

GBP/USD little changed, near 4-month lows

The pound was little changed against the U.S. dollar on Friday, still hovering close to four-month lows after the release of mixed U.S. economic reports as recent comments from the Bank of England continued to dampen demand for sterling.
Forex - GBP/USD little changed, near 4-month lowsPound holds steady against dollar after U.S. data
GBP/USD hit 1.6701 during U.S. morning trade, the session high; the pair subsequently consolidated at 1.6696, inching up 0.06%.
Cable was likely to find support at 1.6658, Thursday's low and resistance at 1.6778, the high of May 30.
In a preliminary report, the University of Michigan said that its consumer sentiment index ticked down to a nine-month low of 79.2 in August, from a reading of 81.8 the previous month. Analysts had expected the index to rise to 82.5 this month.
A separate report showed that U.S. industrial production rose 0.4% in July, beating expectations for a 0.3% gain, after an increase of 0.4% in June whose figure was revised from a previously estimated 0.2% rise.

Separately, the New York Federal Reserve said that its Empire State manufacturing index fell to a four-month low of 14.7 this month, from a reading of 25.6 in July, confounding expectations for a decline to 20.0.
Data also showed that U.S. producer price inflation rose 0.1% last month, in line with expectations, after a 0.4% increase in June.
Core producer price inflation, which excludes food, energy and trade, rose 0.2% in July, in line with market projections, and after a 0.2% gain the previous month.
Earlier Friday, sterling showed little reaction after official data showed, in a second estimate, that U.K. gross domestic product grew 0.8% in the second quarter, in line with market expectations.
Year-on-year, the U.K. GDP expanded at a rate of 3.2%, compared to expectations for 3.1% growth.
Demand for the pound remained under pressure after the BoE cut its wage growth forecast for this year in half on Wednesday and said that the rate of pay growth would be a key factor in determining how quickly interest rates will rise.
Sterling was lower against the euro, with EUR/GBP adding 0.13% to 0.8020.
Sentiment on the euro remained vulnerable after preliminary data on Thursday showed that the euro zone economy failed to grow in the three months to June.
The data added to pressure on the European Central Bank to do more to shore up growth after it cut rates to record lows in June.

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