British pound edged higher versus the US dollar on Monday, trading close to two-week highs, after UK Prime Minister David Cameron said an improvement in the economy may allow the government to lower taxes, while the Group of 20 nations emphasized the need a careful shift to be made away from monetary easing in order to prevent market volatility and a negative influence upon the global economic recovery.
GBP/USD hit a session high at 1.5297 at 0:10 GMT, the highest point since July 3rd, after which consolidation followed at 1.5282. Support was expected at July 19th low, 1.5195, while resistance was to be met at July 3rd high, 1.5345.
“As we start to see the economy grow stronger – and it is growing stronger – as we start to see the country improve, actually I want to give people back some of their hard-earned money and try to reduce their taxes,” Cameron said in an interview on BBC Television broadcast yesterday, as cited by Bloomberg.
Meanwhile, finance ministers and central bankers from the G-20 group stated on Saturday, that future changes to monetary policy should be “carefully calibrated and clearly communicated”, so that US and Japan not to cause transnational disturbances, embarking on a pare back of their stimulus.
Over the past few weeks market sentiment was dominated by uncertainty over the timing of the possible scale back to FEDs stimulus program, while on July 17th Chairman Bernanke said the central bank expected to begin tapering asset purchases by the end of the year, but also added that monetary policy was not on a “preset course”.
Elsewhere, the pound remained stable against the euro today, as EUR/GBP cross was trading at 0.8608 at 9:42 GMT, up by a mere 0.01%.
The sterling has advanced 1.9% in the past three months, according to Bloomberg Correlation-Weighted Indexes, tracking 10 developed-market currencies.
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