Sterling fell to session lows against the dollar on Friday after Federal Reserve Chairman Ben Bernanke offered no firm commitment to fresh easing measures to stimulate the US economy, which lent knee-jerk support to the greenback. The release of the second estimate of UK growth in the second quarter, in line with the initial estimate of 0.2 percent, had no impact on the pound.
Markets had been on tenterhooks all week for Bernanke's speech, with some anticipation he might make a specific commitment to further monetary easing measures. Instead Bernanke said the Fed was prepared to employ tools as needed to promote a stronger recovery. "The market wanted instant gratification but it was never going to get that from this. I think this is just a knee-jerk reaction for the dollar and don't see it lasting," said Adrian Schmidt, currency strategist at Lloyds Banking Group.
Sterling was down around 0.3 percent for the day at a session low of $1.6236, falling from around $1.6300 before Bernanke's speech. Technical analysts highlighted support from sterling's 55-day moving average at $1.6224. The euro traded with slight gains against sterling at 88.44 pence. Resistance was highlighted at 88.63, the 50 percent retracement of the euro's fall from July to August. The pound has also been hampered by the market's view that UK interest rates are likely to be kept on hold through 2012, with some thinking more quantitative easing may be needed to support the British economy.
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