British Pound Hits weekly low amid positive UK data
The British pound hit a weekly low against the US dollar, as sentiment weakened in spite of upbeat UK data.
Sterling has yet to recover from the previous session, when it fell more than 100 pips against the US dollar after weaker than forecasted manufacturing PMI fueled interest rate speculation. Toward the end of the week, sentiment continued to favour the US dollar, which continued to strengthen against a basket of its major peers.
The British pound declined 16 pips against the greenback after bouncing from below 1.64 US. As of the mid-day North American session, the GBPUSD pair was trading at 1.6431. Technical support is ascending at 1.6248, 1.6289 and 1.6330. On the upside, resistance is ascending at 1.6522, 1.6564 and 1.6605.
Today’s data releases suggest the British pound will continue to be supported by a strengthening domestic economy. UK construction output remained elevated in December, with business activity expanding across all major segments of the construction sector. Meanwhile, November was the strongest month in almost six years for mortgage approvals, as lenders granted 70,758 mortgages that month, according to the Bank of England. At the same time, home prices rose 1.4 percent in December, the biggest increase in more than four years, according to the Nationwide Building Society.
The technical outlook on the British pound is bullish, although the currency’s recent performance suggests traders are uncertain about the path of BOE monetary policy. The performance of the pound is tied to perceptions about monetary policy, and whether traders believe the pace of UK recovery warrants an interest rate hike from the BOE. Although it has not announced plans to do so, the BOE is expected to become the first of the major central banks to raise interest rates.
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