Investing.com - The pound edged up against the U.S. dollar on Monday, as comments by Bank of England Deputy Governor Charles Bean continued to support demand for sterling, although Friday''s upbeat U.S. data also lent support to the greenback.
GBP/USD hit 1.6853 during U.S. morning trade, the session high; the pair subsequently consolidated at 1.6843, adding 0.09%.
Cable was likely to find support at 1.6784, the low of May 16 and resistance at 1.6917, the high of May 22.
Demand for sterling continued to be underpinned after BoE Deputy Governor Charles Bean said Saturday that U.K. interest rates could start rising before next spring.
The pound also remained supported after last week''s minutes of the BoE’s May meeting indicated that some policymakers believe the decision on when to raise rates is "becoming more balanced," indicating that they are becoming more hawkish about the argument for hiking interest rates.
Meanwhile, the greenback remained supported after data on new home sales on Friday added to signs of a recovery in the housing market.
The Commerce Department reported that sales of new homes rose by a larger-than-expected 6.4% to 433,000 in April, after two months of decline. Analysts had been expecting a figure of 425,000. March''s number was revised up from 384,000 to 407,000.
Sterling was little changed against the euro, with EUR/GBP inching 0.02% higher to 0.8101.
Also Monday, European Central Bank President Mario Draghi said the bank saw a risk of a deflationary cycle taking hold in the euro zone.
Draghi said the ECB is ready to act should it see signs of a negative inflation spiral taking hold, and indicated that the bank is weighing a wide range of policy options, including interest rate cuts, and liquidity injections or broad-based asset purchases to help shore up the fragile recovery in the euro area.
The comments were made at the new ECB annual conference in Sintra, Portugal.
Trade volumes were expected to remain thin on Monday with U.K. markets closed for a public holiday and markets in the U.S. remaining shut for the Memorial Day holiday.