RTRS:Sterling steady versus dollar as market awaits U.S. data
(Reuters) - Sterling held steady against the dollar on Monday, staying near recent highs, with trade subdued before U.S. jobs data where a weak number could add to expectations the Federal Reserve will delay scaling back its monetary stimulus.
U.S. non-farm payrolls data are due on Tuesday.
In the UK, the focus will be on Friday's preliminary third-quarter gross domestic product data, which is forecast to show the economy grew by a strong quarterly rate of 0.8 percent.
This would boost the pound as it would add to the view that UK interest rates are likely to rise earlier than the Bank of England has flagged following a string of solid British data in recent weeks.
Sterling was steady at $1.6173, staying close to a peak of $1.6224 hit on Friday, its highest level since October 3.
Further gains could see it target chart resistance at the October 1 peak of $1.6260 and the 2013 high of $1.6380.
"There is a lot of optimism ahead of the Q3 GDP report, which could open up the $1.63/$1.6350 area," said Nawaz Ali, market analyst at Western Union Business Solutions.
"There is the feeling that the Fed will wait for the next couple of months to see how the shutdown has affected the economy, perhaps pushing tapering into 2014 which is bearish for the dollar."
Expectations are that the negative impact on the U.S. economy of the 16-day government shutdown earlier this month will mean the Fed will not start reducing the pace of asset purchases until the first or even second quarter of 2014.
By contrast, the sterling overnight interbank average (SONIA) rate curve showed investors were pricing in the risk of an interest rate hike within 18 months., well before the late 2016 timeframe that the BoE has flagged.
"Cable (sterling/dollar) should see good demand in the $1.6120/40 area as traders position for what should be a very strong third-quarter UK GDP release on Friday," analysts at ING said in a note to clients.
Bank of England policymaker Ben Broadbent said in an interview with Sky News on Sunday that the central bank had leeway to raise record low interest rates without hitting borrowers buying homes through a government lending scheme.
The euro edged down 0.1 percent to 84.52 pence, inching away from last week's peak of 85.10 pence, which was its highest level since September 2.
