British pound edged higher against the US dollar on Friday, poised for weekly gains, as market players were betting that the US debt-limit debates will urge the Federal Reserve Bank to leave the monthly pace of its monetary stimulus unchanged, while this weighed on the greenback.
GBP/USD rose to a session high at 1.6194 at 8:15 GMT, also the pairs highest point since October 3rd, after which consolidation followed at 1.6184, gaining 0.13% for the day. Support was likely to be found at October 7th low, 1.6026, while resistance was to be encountered at October 3rd high, 1.6241.
Federal Reserve Bank of Chicago President Charles Evans, a voting member of the Federal Open Market Committee this year, said yesterday that the central bank should put off scaling back of monetary stimulus, because of disruptions in economic data caused by the partial US government shutdown that ended just yesterday.
US President Barack Obama signed into law the measure to fund the government through January 15th 2014, and also extend nation’s borrowing authority until February 7th, while another round of debates was seen quite probable in the future. This news spurred investors’ appetite for riskier assets. However, this temporary solution on the fiscal issue does not resolve the underlying budgetary issues, which divide Republicans and Democrats in the United States.
Meanwhile, the sterling was holding gains against the greenback, supported by strong data, released yesterday. The pound also headed for a weekly gain against the euro, as recent economic data showed that UK economy was gaining momentum. Retail sales in the country increased 0.6% in September on a monthly basis, exceeding preliminary estimates of a 0.4% gain. August’s result has been revised to a 0.8% drop from a 0.9% drop previously. Annual retail sales climbed 2.2% in September, following the 2.1% gain in August.
Elsewhere, the pound was higher against the euro, as EUR/GBP cross slipped 0.11% on a daily basis to trade at 0.8453 at 9:42 GMT. GBP/JPY pair was steady, trading at 158.40 at 9:44 GMT, gaining 0.06%. The pound has risen 5.2% during the past six months, or the best performing currency among 10 developed-nation currencies, tracked by Bloomberg Correlation-Weighted Indexes. The euro has strengthened 4%, while the US dollar has reduced its value by 1.3%.
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