Investing.com - The pound fell to one-week lows against the dollar on Wednesday, extending losses from the previous session as dovish comments by Bank of England Governor Mark Carney curbed expectations for a U.K. rate hike.
GBP/USD touched lows of 1.6952, and was last at 1.6966, down 0.11%.
Cable was likely to find support at 1.6925 and resistance at 1.7030, Tuesday’s high.
The drop in the pound came after BoE Governor Mark Carney said Tuesday that wage growth has been lower than expected, which could indicate that there is more slack in the U.K. labor market than the bank previously thought.
He balanced this by saying that the economic recovery has more momentum than the bank would have expected.
In testimony to parliament’s Treasury committee, Carney said the exact timing of rate rises would be driven by data and reiterated that when rate hikes did come they would be limited and gradual.
Earlier this month, official data showed that the U.K. unemployment rate fell to a more than five year low of 6.6% in the three months to April. However, wage growth slowed in the same period, falling to an average of 0.9% from 1.3% during the previous three months.
Sterling touched a five-and-a-half year high of 1.7062 against the dollar on June 19, as investors brought forward expectations for a rate hike to the fourth quarter of this year from the early part of 2015, after Carney said interest rates could rise sooner than investors expect.
The outlook for the U.S. recovery was boosted on Tuesday after data showed that consumer confidence and new homes sales both rose to six year highs.
The CB consumer confidence index jumped to 85.2 in June from 83.0 last month. It was the highest reading since January 2008.
Another report showed that the number of new home sales also rose to a six-year high, surging 18.6% in May to an annual rate of 504,000. It was the highest level since May 2008 and the largest monthly increase since January 1992.
Elsewhere, the euro rose to almost two-week highs against the pound, with EUR/GBP easing up 0.12% to 0.8019. The pair was trading at around 0.7984 ahead of Carney’s remarks on Tuesday.