Forex - GBP/USD remains higher on BoE rate hike talk

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Investing.com - The pound remained higher against the U.S. dollar on Monday, as sustained expectations for the Bank of England to raise interest rates before other central banks continued to support demand for sterling.

GBP/USD hit 1.6903 during U.S. morning trade, the pair's highest since May 9; the pair subsequently consolidated at 1.6890, rising 0.24%.

Cable was likely to find support at 1.6806, the low of April 30 and resistance at 1.6973, the high of May 8.

The pound remained supported by expectations that the BoE will revise up its forecast for growth when it presents its quarterly inflation report on Wednesday.

The latest U.K. jobs report, also due for release on Wednesday, is expected to show a another decline in the unemployment rate to a more than five year low of 6.8% in the three months to March, while wage growth is expected to rise again.

A strong reading would reinforce expectations that the BoE will raise interest rates ahead of other central banks.

The BoE left rates on hold at the conclusion of its two-day policy meeting on Thursday, in a widely anticipated decision.

Sterling was also higher against the euro, with EUR/GBP slipping 0.19% to 0.8148.

The single currency remained under pressure after European Central Bank President Mario Draghi said Thursday the bank is "comfortable" with acting to shore up growth and stop inflation from falling too low at its next meeting in June.

On Monday, ECB Vice President Vitor Constancio said the medium term inflation outlook will be the main criteria the bank considers when it decides whether to implement fresh policy measures.

He said the ECB was considering a wide range of policy options but stopped short of indicating what the bank may decide.

Separately, International Monetary Fund Managing Director Christine Lagarde renewed calls for more stimulus from the ECB, warning that persistently low inflation rates posed a serious threat to the European recovery.

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This article appears in: Investing , Forex and Currencies

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