British pound rose versus the greenback before the sale of UK 2068 gilts

On Tuesday British pound edged higher against the US dollar, as the Debt Management Office prepared to sell UK government bonds with maturity in 2068 via banks.

GBP/USD hit a session high at 1.5460 at 6:58 GMT, after which consolidation followed at 1.5450. The sterling was likely to find support at June 21st low, 1.5405, while resistance was to be encountered at June 21st high, 1.5482.

Bank of England Governor Mervyn King is expected to testify to the Treasury Committee in his final appearance as central-bank head. King will take a statement on the Bank of England’s May 2013 inflation report along with Chief Economist Spencer Dale, and Monetary Policy Committee members Ben Broadbent and Martin Weale.

The yield on UK 10-year gilts rose to 2.59% yesterday, the highest point since October 2011, after Federal Reserve Chairman Ben Bernanke announced last Wednesday that policymakers may embark on asset purchase paring by the end of this year and terminate them in mid-2014. Strategists at Scotiabank said on Monday, that the United Kingdom may sell as much as 4 billion GBP of the 2068 gilts today.

Additionally, on Tuesday it became clear that BBA Loans for House Purchase in the United Kingdom rose more than expected in May, the number reached 36 102 versus 33 200. Revised data during the preceding period showed 32 952 loans approved, which was a revision up from 32 153 loans previously.

However, pound’s gains were likely to remain capped, because of the sustained fears over a credit squeeze in China. This could lead to bolstered demand for safe haven currencies.

British pound was fractionally higher against the euro, as EUR/GBP cross decreased by 0.07% to 0.8492.