Forex - GBP/USD hovering close to 2-month low after Fed comments

Forex Pros – The pound was hovering close to a two-month low against the U.S. dollar on Tuesday, after St. Louis Federal Reserve President James Bullard said U.S. policymakers may not wait for global uncertainties to be resolved before they begin tightening monetary policy.

GBP/USD hit 1.5943 during early U.S. trade, the daily low; the pair subsequently consolidated at 1.5979, slipping 0.07%.

Cable was likely to find short-term support at 1.5936, Monday’s low and a two-month low and resistance at 1.6141, last Friday’s high.

Earlier in the day, Bullard said the Federal Reserve's USD600 billion asset purchase program could be trimmed by some USD100 billion.

Bullard also said that said U.S. policymakers may not be willing or able to wait for global uncertainties to be resolved before they begin normalizing monetary policy and warned that waiting too long to tighten policy may produce "a lot of inflation" in the U.S. and around the world.

Elsewhere, official data showed that while the U.K. economy shrank less-than-expected in the fourth quarter of 2010, the new figure was still the biggest decline since the second quarter of 2009.

The pound was also lower against the euro, with EUR/GBP easing up 0.05% to hit 0.8813.

Also Tuesday, a U.S. report showed earlier that the S&P/Case-Shiller house price index fell for the seventh consecutive month in January, while a separate report showed that U.S. consumer confidence fell more-than-expected in March.