British pound edged higher against the US dollar on Friday, following upbeat public sector net borrowing data out of the United Kingdom.
GBP/USD reached a session high at 1.6065 at 7:45 GMT, after which consolidation followed at 1.6054, gaining 0.13% for the day. Support was to be received at September 18th low, 1.5893, while resistance was to be met at September 19th high, 1.6146.
Public Sector Net Borrowing (PSNB) in the United Kingdom rose less than expected in the month of August, reaching 11.5 billion GBP instead of 11.9 billion GBP, after the 1.6 billion GBP decline in July.
The UK benchmark 10-year gilt yield reached 2.90%, having decreased a mere 0.01 percentage point, this week, while the price of the 2.25%-bond with maturity in September 2023 stood at 94.39.
In the mean time, US Republicans and Democrats were to reach a decision on how to continue funding the government and whether to raise the debt ceiling. In case Barack Obamas administration and Republicans do not reach an agreement to raise the borrowing cap before October, the United States Treasury might be able to avoid surpassing the debt limit of 16.7 trillion USD, as it could trigger countrys default.
The greenback was gradually recovering from its sharp decline against peers on Wednesday after the Federal Reserve Bank refrained from introducing a change in its easing program of 85 billion USD per month. This decision underscored Chairman Ben Bernanke’s willingness to do anything to lower unemployment and pushed back market expectations for a tightening of policy. Bernanke said at the press conference after the FOMC meeting, that the central bank must determine its policies based on “what’s needed for the economy,” even if it surprises global markets.
Elsewhere, the British pound was slightly higher against the euro, with EUR/GBP cross erasing 0.11% for the day to trade at 0.8432 at 9:07 GMT. GBP/JPY pair was losing 0.04% to trade at 159.41 at 9:08 GMT. The sterling has risen 5.7% during the past six months, or the best performing currency among the 10 developed-nation currencies, tracked by Bloomberg Correlation-Weighted Indexes. The euro has advanced 3.9%, while the US dollar has depreciated 1.3%.
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