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Cable looks to snap 7-day losing streak

H.S. Borji
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Cable looks to snap 7-day losing streak

The British pound was little changed against its US counterpart Monday, but looked poised to snap a seven-day losing streak that was the longest in over two years.

The GBPUSD was trading at 1.6981, climbing 0.03 percent. The pair eased off an intraday high of 1.6999. Initial support is located at 1.6958 and resistance at 1.6996. Despite the recent skid, the pair is trading well above its long-run moving average.

Cable has declined 1 percent since July 16, as the British pound was hampered by disappointing economic data and signs the Bank of England will keep interest rates at record lows for the time being.

The US dollar index, which tracks the performance of the world’s most actively traded currency against six of its peers, was unchanged at 81.03.

Demand for the greenback increased after Federal Reserve Chair Janet Yellen suggested the central bank was open to shifting monetary policy should the labour market recover at a faster rate.

Earlier this month Federal Reserve Bank of Dallas President Richard Fisher said interest rates could rise early next year or even sooner.

The Federal Reserve is expected to unwind its record $4.3 trillion stimulus program this October.

Cable has advanced more than 2.4 percent this year as UK recovery deepened at a faster rate. UK gross domestic product accelerated 0.8 percent in the second quarter, government data confirmed last week. That was higher than the growth levels recorded just prior to the global economic crisis in 2008.

Compared to the second quarter of 2013, the UK economy grew 3.1 percent.

On Tuesday the Bank of England will report on mortgage approvals and consumer credit for the month of June. Mortgage approvals are forecast to have increased from May’s rate of 61,707.

The British Bankers’ Association said last week mortgage approvals advanced 2,500 to 43,300 in June.

On Wednesday GfK will report on UK consumer confidence. The closely-followed index is expected to show an improvement in consumer sentiment in July.

On Friday Markit Group will report on the UK manufacturing industry. The gauge of manufacturing activity is forecast to dip slightly from 57.5 to 57.2.

British manufacturing output increased at the sharpest rate in seven months in June, supporting the view the recovery was becoming more balanced.

In US data, pending home sales declined 1.1 percent in June, the National Association of Realtors said today. Compared to June 2013, contracts to buy existing homes fell 7.3 percent.

A separate industry gauge showed the US economy expanded at a robust pace in July. Markit Group’s composite PMI index, which measures manufacturing output and services activity, was unchanged at 61 in July, according to the flash estimate.

In other trading, the pound was unchanged against the euro, as the EURGBP traded at 0.7909. Initial support is located at 0.7898 and resistance at 0.7928.

In Eurozone data, Italian business confidence unexpectedly declined this month, according to Istat. The business confidence index in manufacturing declined from 99.9 to 99.7, as production expectations improved while assessments of order books deteriorated.

The confidence index is construction increased from 81.6 to 83.2, and the market services confidence index increased from 88.1 to 92.5.

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