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Forex - GBP/USD turns higher despite dovish BOE minutes

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Forexpros - The pound turned higher against the U.S. dollar on Wednesday, erasing losses suffered in the wake of the release of the minutes from the Bank of England's August policy meeting and after disappointing U.K. employment data.

GBP/USD pulled back from 1.6347 during European afternoon trade, the daily low; the pair subsequently consolidated at 1.6458, up 0.02% on the day.

Cable was likely to find support at 1.6322, Tuesday's low and resistance at 1.6495, the high of June 1.

The BOE voted unanimously 9-0 to keep interest rates at a record low of 0.5% in August, as the euro zone's ongoing sovereign debt crisis and indications the global economic recovery was lagging threatened to hurt growth in the U.K.

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

The decision was the first since May 2010 without a vote for a rate increase. Policy makers voted 7-2 to keep interest rates on hold in July.

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.

Some policy maker "considered whether there was a case for increasing" asset purchases, but they concluded the case "was not yet strong enough," the minutes showed.

The MPC said further asset purchases might "become warranted were some of the downside risks to materialize."

Disappointing employment data also confirmed the more dovish policy outlook, after the U.K. Office for National Statistics said earlier that the claimant count rose by a seasonally adjusted 37,100 in July, above expectations for an increase of 20,000.

The rate of unemployment rose unexpectedly to 7.9% from 7.7%, confounding expectations for unemployment to hold steady at 7.7%.

Elsewhere, the pound was down against the euro, with EUR/GBP gaining 0.37% to hit 0.8787.

Later in the day, the U.S. was to publish official data on producer price inflation, as well as government data on crude oil stockpiles.

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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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