Investing.com - The pound extended gains against the U.S. dollar on Wednesday, to trade near one-and-a-half month highs as demand for sterling remained supported after the Bank of England linked a rise in bank rates to a decline in the U.K. unemployment rate to 7%.
GBP/USD hit 1.5531 during U.S. morning trade, the pair's highest since June 21; the pair subsequently consolidated at 1.5514, jumping 1.08%.
Cable was likely to find support at 1.5207, the session low and resistance at 1.5677, the high of June 19.
The pound strengthened after BoE Governor Mark Carney said the bank plans to keep interest rates on hold at 0.5% until the U.K. unemployment rate falls to a threshold of 7% from its current level of 7.8%, something he added is unlikely to occur for another three years.
Carney said unemployment is not a target and that the 7% threshold could be set aside if low bank rates begin to pose a threat to financial stability, if the public's medium-term inflation expectations rise or if medium term inflation forecasts rise above 2.5%.
The BoE said that while an economic recovery was "taking hold" growth was likely to be "weak by historical standards."
The bank expects the economy to expand by 0.6% in the current quarter and said that growth will reach an annual rate of 2.6% in two years' time, up from 2.2% in its last report.
Meanwhile, uncertainty over how soon the Federal Reserve will begin to unwind its USD85 billion-a-month stimulus program persisted following comments by senior Fed officials on Tuesday.
Chicago Federal Reserve Bank Chairman Charles Evans said he would not rule out the withdrawal of stimulus measures at the bank’s September meeting, echoing remarks by Dennis Lockhart, president of the Atlanta Fed earlier Tuesday.
Sterling was also sharply higher against the euro with EUR/GBP retreating 0.97%, to hit 0.8585.
Also Wednesday, official data showed that German industrial production jumped 2.4% in June, easily surpassing expectations for a 0.3% increase.
The report came one day after stronger-than-forecast German factory orders data reinforced expectations that the euro zone economy is starting to recover.
GBP/USD hit 1.5531 during U.S. morning trade, the pair's highest since June 21; the pair subsequently consolidated at 1.5514, jumping 1.08%.
Cable was likely to find support at 1.5207, the session low and resistance at 1.5677, the high of June 19.
The pound strengthened after BoE Governor Mark Carney said the bank plans to keep interest rates on hold at 0.5% until the U.K. unemployment rate falls to a threshold of 7% from its current level of 7.8%, something he added is unlikely to occur for another three years.
Carney said unemployment is not a target and that the 7% threshold could be set aside if low bank rates begin to pose a threat to financial stability, if the public's medium-term inflation expectations rise or if medium term inflation forecasts rise above 2.5%.
The BoE said that while an economic recovery was "taking hold" growth was likely to be "weak by historical standards."
The bank expects the economy to expand by 0.6% in the current quarter and said that growth will reach an annual rate of 2.6% in two years' time, up from 2.2% in its last report.
Meanwhile, uncertainty over how soon the Federal Reserve will begin to unwind its USD85 billion-a-month stimulus program persisted following comments by senior Fed officials on Tuesday.
Chicago Federal Reserve Bank Chairman Charles Evans said he would not rule out the withdrawal of stimulus measures at the bank’s September meeting, echoing remarks by Dennis Lockhart, president of the Atlanta Fed earlier Tuesday.
Sterling was also sharply higher against the euro with EUR/GBP retreating 0.97%, to hit 0.8585.
Also Wednesday, official data showed that German industrial production jumped 2.4% in June, easily surpassing expectations for a 0.3% increase.
The report came one day after stronger-than-forecast German factory orders data reinforced expectations that the euro zone economy is starting to recover.