Investing.com - The pound jumped to two-week highs against the dollar on Wednesday and hit 16-month peaks against the euro after data showed that U.K. retail sales surged in April, while the minutes of the Bank of England’s May meeting indicated that policymakers are becoming more hawkish.
GBP/USD hit 1.6921, the highest since May 9 and was last up 0.42% to 1.6908.
Cable was likely to find support at 1.6801, Tuesday’s low and resistance at 1.6973, the high of May 8 and an almost five year peak.
U.K. retail sales jumped 1.3% in April, the Office of National Statistics said, more than double forecasts for a 0.5% increase, driven by higher food sales over the Easter holiday.
On a year-over-year basis, retail sales climbed 6.9% in April, ahead of expectations for a 5.2% gain after rising by 4.8% in March.
At the same time, the minutes of the BoE’s May meeting showed that the Monetary Policy Committee voted unanimously to leave interest rates on hold at record lows.
However, the minutes also noted that some members believe the decision on when to raise rates is "becoming more balanced," indicating that some policymakers are becoming more hawkish about the argument for hiking borrowing costs.
The dollar remained softer ahead of the minutes from the Federal Reserve’s latest monetary policy meeting due out later Wednesday, as investor’s awaited insight on the central bank's view of the economy.
Recent U.S. economic reports indicating that the recovery remains uneven have weighed on U.S. Treasury yields, pressuring the dollar.
On Tuesday, New York Fed President William Dudley reiterated the central bank’s dovish stance, saying the pace of rate hikes was likely to be “slow”.
EUR/GBP fell 0.31% to 0.8103, the lowest level since January 2013 and was last down 0.32% to 0.8109.
The euro remained under pressure from mounting expectations for monetary easing by the European Central Bank at its next meeting in June and data last week showing that the euro zone economy grew at a slower than forecast rate in the first quarter.