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Forex - GBP/USD holds gains, BoE statement supports

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Investing.com -

Investing.com - The pound held gains against the U.S. dollar on Thursday, as demand for sterling remained supported after the Bank of England left its monetary policy unchanged, while concerns over the U.S. job market weighed on the greenback.

GBP/USD hit 1.6792 during U.S. morning trade, the pair's highest since May 28; the pair subsequently consolidated at 1.6782, gaining 0.27%.

Cable was likely to find support at 1.6693, the low of May 29 and resistance at 1.6882, the high of May 27.

In a widely expected move, the BoE's Monetary Policy Committee voted to keep interest rates on hold at their current record low of 0.5%. The bank also made no change in its quantitative easing program, which remains at £375 billion.

Expectations for a U.K. rate hike in the early part of next year have recently propelled sterling to multi-year highs against the dollar, after a string of strong economic reports indicated that the recovery is deepening.

Earlier Thursday, data showed that U.K. house prices rose by 3.9% last month, exceeding expectations for a 0.7% gain, after a 0.3% fall in April, whose figure was revised from a previously estimated 0.2% slip.

In the U.S., the Department of Labor said the number of individuals filing for initial jobless benefits in the week ending May 31 increased by 8,000 to 312,000 from the previous week's revised total of 304,000.

Analysts had expected jobless claims to rise by 6,000 to 310,000 last week.

Sterling was higher against the euro, with EUR/GBP shedding 0.31% to 0.8099.

The single currency weakened broadly after the European Central Bank lowered its benchmark interest rate to a record-low 0.15% from 0.25%, compared to expectations for a cut to 0.1%.

Speaking at the ECB's post-policy meeting press conference, Mario Draghi said the rate decision would contribute to bringing inflation rates closer to the centrak bank's target of just below 2% and that it is determined to safeguard this anchoring.

Draghi added that key ECB rates will remain at present levels for an extended period of time, but that the bank is prepared to act swiftly with further monetary easing measures, including asset-backed security purchases, in case of a prolonged period of low inflation.

To support bank lending, Mario Draghi said the ECB we will be conducting a series of Targeted Longer Term Refinancing Operations (TLTROs), all of which will mature in September 2018. Two successive TLTROs are scheduled to be launched in September and December 2014, he added.

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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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