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Forex - EUR/GBP jumps to 2-week high after BoE minutes

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Forex Pros - The euro extended gains against the pound on Wednesday, jumping to a two-week high after minutes from the Bank of England's June 9 meeting showed some policymakers believed that more asset purchases may be needed.

EUR/GBP hit 0.8922 during European morning trade, the pair's highest since June 8; the pair subsequently consolidated at 0.8909, gaining 0.41%.

The pair was likely to find support at 0.8824, Tuesday's low and resistance at 0.8975, the high of June 8.

The BoE voted 7-2 vote to keep interest rates at a record low of 0.5% this month, as most members judged that it was "appropriate to maintain the current stance of monetary policy at this meeting."

According to the minutes, Monetary Policy Committee members Martin Weale and Spencer Dale repeated previous calls for a 0.25% hike in the lending rate.

Ben Broadbent, the panel's newest member, voted in favor of keeping rates on hold. Broadbent replaced Andrew Sentance, who had voted in previous meetings for a 0.5% rate hike.

The MPC voted 8-1 to maintain the central bank's asset-purchase program at GBP200 billion, with Adam Posen repeating a call to boost the program by GBP50 billion.

Policymakers noted that the current weakness of demand growth was "likely to persist for longer than previously thought". "Moreover, the fiscal challenges in the euro-area periphery highlighted the potential for further adverse shocks to demand."

Meanwhile, Greece's parliament supported Prime Minister George Papandreou's new cabinet on Tuesday, wining the support of 155 out of 300 parliament members.

However, markets remained cautious as Greek lawmakers still need to support next week's vote on new austerity measures, which include harsh spending cuts and new taxes over the next five years.

The pound was also down against the U.S. dollar, with GBP/USD dropping 0.75% to hit 1.6123.

Later in the day, the Federal Reserve was to announce its federal funds rate. The announcement will be followed with a press conference by Fed Chairman Ben Bernanke to discuss the bank's rate statement.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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