British pound advanced to its highest level in two months against the US dollar on Tuesday, as the lack of clarity over the future of Federal Reserve Banks stimulus program was still present.
GBP/USD reached a session high at 1.5678 at 8:32 GMT, also the pairs highest since June 18th, after which consolidation followed at 1.5668. Support was expected at August 19th low, 1.5608, while resistance was to be encountered at June 18th high, 1.5722.
The pound was continuously supported after last week it became clear that UK jobless claims and retail sales outperformed preliminary estimates, boosting optimism over economic recovery.
Today UK 10-year government bonds increased for the first time in seven days, as decline in equities worldwide revitalized demand for the relative safety of Great Britain’s fixed-income securities. The yield of 10-year bonds decreased by 0.04 percentage point to 2.70%, after climbing to 2.75% on Monday, marking the highest level since August 8th 2011. Bloomberg reported that the Debt Management Office in the United Kingdom will sell 1.75 billion GBP (2.74 billion USD) of inflation-linked gilts on Tuesday.
Elsewhere, the euro was higher against the British pound, as EUR/GBP cross added 0.22% for the day to trade at 0.8542 at 9:22 GMT. The euro advanced 0.38% to 1.3386 against the greenback due to speculations ahead of the highly anticipated minutes of FOMC meeting in July, regarding the time frame of the possible tapering of stimulus. Additionally, the pound was steady against the Japanese yen, as GBP/JPY pair dipped 0.03% to trade at 152.65 at 9:23 GMT. Ultimately, the Sterling has gained 5.9% during the past six months, the best performing currency among 10 developed-nation currencies, tracked by Bloomberg Correlation-Weighted Indexes. The euro advanced 3.3%, while the US dollar strengthened 2.7%.