By TraderVox.com
Tradervox (Dublin) – The sterling pound has advanced against the US dollar after a report showing that the Britain’s deficit increased more that the market was expecting. Prior the release of the report, the sterling pound had increase to almost 20-month high against the euro. The pound had increased by 1.8 percent last month making it the best performer among 10 of its peers.
After the release of the report showing that the UK budget deficit increased to £15.870 billion against market estimate of £14.4 billion, the pound increased by 0.1 percent against the greenback to trade at $1.6151, it had earlier touched $1.6155 which is the strongest it has been since October 31. The figure was at £9.93 billion in its previous reading. The pound was little changed against the euro maintaining a 81.62 pence per euro level. The pound had increased to 81.48 pence earlier yesterday which is the strongest since August 23, 2010.
However, at the UK pound is retracing its gains after the report of UK public sector debt. This report indicates that the UK net debt is at 66 percent of GDP which is the highest since the records began. The GBP/USB is appreciating at 0.11 percent currently at 1.6140; the next barrier is at 1.6167 which is the October 31 high. The currency had touched this level before paring its gains. If it breaks this level, the next hurdle will be at 1.6255, the August 2 high. However, if the pound continues to pare its gains, a breakdown of 1.6060 would expose April 20 low of 1.6039 which would open the door for 1.6009.
The trend will be determined by the Housing Price Index and New Home Sales report to be released later today in the US session. Trader will be keeping a close eye on these two reports as well as reports from Canada to assess the performance of the US economy. The demand for haven assets is growing and traders are choosing the pound over the dollar.
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