GBP/USD advances as house prices in UK rise, FOMC meeting in focus

british-pound-collage.previewBritish pound gained ground against the US dollar on Monday, following a report, which revealed house prices in the United Kingdom rose for a ninth consecutive month in October, while the pressure upon the greenback remained before the FOMC policy meeting.

GBP/USD advanced to a session high at 1.6208 at 9:30 GMT, after which consolidation followed at 1.6196, still up 0.17% for the day. Support was likely to be received at October 25th low, 1.6151, while resistance was to be encountered at October 23rd high, 1.6257.

Average home values in England and Wales climbed 0.5% in October on a monthly basis, marking the same rate of increase as in September, according to Hometrack. The index of home prices rose 3.1% in October on annual basis, recording the fastest pace since November 2007, after another 2.4% advance a month ago. This was another sign to bolster the case that economy was gaining momentum.

On the other hand, the Confederation of British Industry (CBI) said that the gauge of annual retail sales growth in the UK tumbled to a value of 2 in October, after a reading of 34 in September, while preliminary estimates pointed a much lesser drop, to 32 in October. Despite this figure, retailers expected better sales results in the upcoming month. Among the 125 companies participated in the survey, 42 have registered increasing volume of sales on annual basis, while 39 have said their sales decreased. This indicator reflects the short-term tendencies in the sectors of retail and wholesale trade in the country and is also vital for Bank of Englands economic policy.

These data points came out after last week the Office for National Statistics (ONS) said that nations Gross Domestic Product expanded 0.8% during the third quarter of the year, or at the fastest rate since 2010.

The yield on UK benchmark 10-year gilts ticked up one basis point, or 0.01 percentage point, to reach 2.62%, after losing 10 basis points a week ago.

Meanwhile, market players remained wary before Federal Reserve Bank policymakers meet on October 29th-30th. Analysts project that banks officials will abstain from trimming the monthly pace of the monetary stimulus this month and wait until March 18th-19th. According to projections the quantitative easing may be pared to 70 billion USD per month from the current 85 billion USD per month.

Elsewhere, the sterling was higher against the euro, with EUR/GBP cross losing 0.11% on a daily basis to trade at 0.8526 at 11:09 GMT. It became clear that business confidence in Italian sector of manufacturing increased in October, reaching its highest level in two years, which suggested that export-oriented companies may drag nations economy out of recession, despite the weak domestic demand. The gauge of business confidence rose to a value of 97.3 in October from the revised up reading of 96.8 in September (96.6 previously), while experts had anticipated a slow down to 96.0 in October.

In addition, GBP/JPY pair was gaining 0.28% to trade at 158.05 at 11:12 GMT. The pound has risen 3.3% over the past three months, or the best performing currency among the 10 developed-nation currencies, which are tracked by Bloomberg Correlation-Weighted Indexes. The euro has added 1.8%, while the US dollar has depreciated 2.5% during the same period. is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover Forex, Price Action and Social Trading.

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