Forex - GBP/USD edges higher ahead of U.K. jobs data

Published 03/14/2012, 05:06 AM
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Investing.com - The pound edged higher against the U.S. dollar on Wednesday, ahead of the release of U.K. employment data, but gains were limited as diminished expectations for a third round of U.S. monetary stimulus supported the greenback.

GBP/USD hit 1.5743 during European morning trade, the session high; the pair subsequently consolidated at 1.5738, gaining 0.21%.

Cable was likely to find support at 1.5620, Tuesday’s low and short-term resistance at 1.5758, the high of March 7.

Investor’s trimmed back expectations for a fresh round of monetary easing after the Federal Reserve upgraded its outlook for the economy in Tuesday’s rate statement.

The Fed said it now expects to see “moderate economic growth” after its January statement said growth would be “modest” and added that higher oil prices could place upward pressure on inflation.

The central bank also acknowledged the recent improvement in the labor market, saying it expected the unemployment rate to “decline gradually.”

However, policymakers reiterated their intention to keep the benchmark interest rate unchanged at a record low through late 2014 and warned that risks to the economic recovery still remained.

The greenback had risen sharply against the pound earlier Tuesday, after official data showed that U.S. retail sales rose to a five-month high of 1.1% in February, coming after data last week showed that the U.S. economy added more jobs than forecast last month.

But sentiment on the pound remained somewhat supported after data on Tuesday showed that total U.K. exports to non European Union countries climbed to a record high in January, although exports to EU countries declined.

The pound was higher against the euro, with EUR/GBP shedding 0.33% to hit 0.8302.

Later Wednesday, the U.K. was to release official data on the claimant count change and the unemployment rate.

The U.S. was to produce official data on the country’s current account, as well as data on import prices and crude oil stockpiles. In addition, Federal Reserve Chairman Ben Bernanke was due to speak; his comments would be closely watched for clues to the future possible direction of monetary policy.

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