GBPUSD gains; BoE will stay on hold

by on January 3, 2013 9:18 am GMT

GBPUSD rose to its highest in more than two and a half months against the dollar on Tuesday after stubborn UK inflation added to expectations the Bank of England will avoid further easing for now.

GBPUSD rose to as high as $1.6226, its strongest since late September. More gains could enable it to target the Sept. 28 peak of $1.6273 and the mid-September high of $1.6310. It was last up 0.1 percent on the day at $1.6215.

The euro was flat against the pound at 81.23 pence, trading down from Monday’s near two-month high of 81.55 pence. Against the dollar, the euro was near a 7-1/2 month high.

Still, investors will look to the minutes for clues on the chances of UK policymakers authorising more bond buying. Quantitative easing or expectations of more asset purchases by the central bank is usually negative for a currency as it increases its supply.

Pivot Woodie Fibonacci
Resistance 3 1.6501 1.6483 1.6441
Resistance 2 1.6441 1.6432 1.6381
Resistance 1 1.6346 1.6328 1.6345
Pivot 1.6285 1.6276 1.6285
Support 1 1.619 1.6172 1.6225
Support 2 1.6129 1.612 1.6189
Support 3 1.6034 1.6016 1.6129