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Forex - Pound off highs vs. dollar after U.K. jobs report, BoE ahead

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Investing.com -

Investing.com - The pound pulled back from session highs against the dollar on Wednesday after data showed that the U.K. unemployment rate fell to a more than five-year low in the three months to March but average earnings slowed.

GBP/USD was last trading at 1.6826, after rising as high as 1.6874 earlier.

Cable was likely to find support at 1.6770 and resistance at 1.6940.

The Office for National Statistics reported that the U.K. unemployment rate ticked down to 6.8% in the three months to March from 6.9% in the three months to February, in line with expectations.

The Bank of England previously announced plans to keep interest rates on hold at record lows as long as the U.K. unemployment rate remains above 7%.

The claimant count fell by 25,100 last month, the ONS said, compared to expectations for a decline of 30,000 people. March's figure was revised to a drop of 30,600 people from a previously reported decline of 30,400.

The report said that average weekly earnings rose by 1.7% on a year-over-year basis in the three months to March, but excluding bonuses average earnings only rose by 1.3% during the quarter, and just 1.0% in March.

Investors were looking ahead to the BoE's quarterly inflation report later in the session for further indications on the timing of a possible rate hike. The central bank was widely expected to upgrade its forecast for economic growth when it presented the report.

Elsewhere, sterling back off 16-month highs against the euro, with EUR/GBP edging up 0.08% to 0.8151 after falling as low as 0.8127 earlier, the weakest level since January 2013.

The euro came under renewed selling pressure on Wednesday following reports that the European Central Bank is preparing to cut rates at its next meeting in June.

Reuters reported that the ECB is preparing a "package of measures" including cuts to all interest rates, with negative rates on bank deposits and measures to bolster lending to small and medium size businesses.

Late last week the ECB indicated that it is "comfortable" with acting at its June meeting to stop inflation in the region from falling too low, after it has a chance to review the latest staff economic projections.

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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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