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Forex - GBP/USD near 4-month lows, BoE still weighs

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Investing.com -

Investing.com - The pound hovered near four-month lows against the U.S. dollar on Thursday, as comments by the Bank of England on Wednesday continued to weigh, while investors eyed the release of upcoming U.S. data on jobless claims.

GBP/USD hit 1.6658 during European morning trade, the pair's lowest since April 8; the pair subsequently consolidated at 1.6688, down 0.01%.

Cable was likely to find support at 1.6607, the low of April 8 and resistance at 1.6755.

The pound came under broad selling pressure after the BoE cut its wage growth forecast for this year in half on Wednesday and said that the rate of pay growth would be a key factor in determining how quickly interest rates will rise.

The central bank cut its forecast for wage growth in 2014 to 1.25% from 2.5% previously, before picking up to 3.25% in 2015.

The bank reiterated that when rates do start to rise they will do so a "small, slow" manner.

Sterling was lower against the euro, with EUR/GBP adding 0.13% to 0.8019.

The euro showed little reaction after preliminary data showed that euro zone gross domestic product failed to grow in the three months to June. Economists had expected a small expansion of 0.1%.

Germany's economy shrank by 0.2% in the three month to June, the first drop since 2012 and worse than forecasts for a contraction of 0.1%, while France's GDP was flat in the second quarter, marking the second consecutive quarter of stagnation.

The weak data indicated that the economic recovery in the euro area is losing momentum, adding to pressure on the European Central Bank to do more to bolster growth after it cut rates to record lows in June.

A separate report showed that the annual rate of euro area inflation came in at 0.4% in July, in line with forecasts and unchanged from the preliminary estimate.

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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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