Investing.com

Investing.com - The pound was steady against the dollar on Monday, remaining supported above the 1.70 level amid expectations that the Bank of England will raise interest rates ahead of its other major peers.



GBP/USD was little changed at 1.7016, not far from the highs of 1.7034 reached last Thursday, the most since August 2009.



Cable was likely to find support at 1.6950 and resistance at 1.7075.



Demand for sterling continued to be underpinned by expectations that the deepening economic recovery in the U.K. will prompt the BoE to raise interest rates sooner than other central banks.



Last Wednesday’s minutes of the central bank’s June meeting showed that policymakers were "somewhat surprised" that the financial markets were pricing in a low probability of interest rates rising this year.



BoE Governor Mark Carney said earlier this month that rates could rise sooner than investors expect. The remarks prompted investors to bring forward expectations for a rate hike to the end of this year from the first quarter of 2015.



Elsewhere Monday, the pound was fractionally higher against the euro, with EUR/GBP dipping 0.05% to 0.7989, holding above the more than one-and-a-half year low of 0.7958 reached early last week.



Data on Monday showed that the euro zone’s composite index of service and manufacturing sector activity fell to a six month low of 52.8 in June from 53.5 in May, indicating that the recovery in the region could be losing momentum.



France’s private sector continued to contract this month, dragging on the euro zone as a whole, while Germany private sector continued to expand this month, but at a slower than forecast rate.



European Central Bank President Mario Draghi said over the weekend that interest rates would stay low over a longer period and that large-scale asset purchases are still part of the central bank''s toolkit.



The ECB cut interest rates to record lows and launched a series of measures to boost lending to companies earlier this month, in a bid to stave off the threat of deflation in the euro area and shore up the recovery.





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