Sterling Touched $2

The sterling broke through 2 versus the dollar for the first time since May 1, on speculation that the Bank of England may quicken its monetary tightening process. Interest rate futures indicate traders have priced in two more rate increases till the year-end. Some even expect that the central bank may lift interest rates by 25 basis points as early as next month.

The dollar was little changed after a report showed the housing market slowed down slightly as expected. US existing home sales dropped 0.3% to an annual rate of 5.97 million units in May. The market will focus on the new home sales report due tomorrow for more clues on the US housing market. Other important data to be released this week include US Durable goods orders, personal income and spending, and Chicago PMI. Beside, the FOMC is scheduled to announce interest rate decision this Thursday afternoon. The Fed is widely expected to hold rates at 5.25% unchanged.

GBPUSD encounters interim resistance at 2.0000, backed by 2.0040 and 2.0080. Subsequent ceilings will emerge at 2.0100, followed by 2.0130 and 2.0150. On the downside, support begins at 1.9950, followed by 1.9930 and 1.99. Additional floors are eyed at 1.9880, backed by 1.9850 and 1.9830.