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Forex - Pound off lows after BoE links bank rates to unemployment

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Investing.com - The pound rebounded from session lows against the dollar on Wednesday after the Bank of England pledged to keep bank rates at current record lows until the U.K. unemployment rate falls to a threshold of 7%.

GBP/USD pulled back from 1.5203, the lowest since Monday, to hit 1.5345 during European late morning trade, 0.01% lower for the day.

Cable was likely to find support at 1.5156, the low of July 18 and resistance at 1.5377, Monday's high.

BoE Governor Mark Carney said the bank plans to keep interest rates on hold at 0.5% until the U.K. unemployment rate falls to a threshold of 7% from its current level of 7.8%, something he added is unlikely to occur for another three years.

Carney said unemployment is not a target and that the 7% threshold could be set aside if low bank rates begin to pose a threat to financial stability, if the public's medium-term inflation expectations rise or if medium term inflation forecasts rise above 2.5%.

The BoE said that while an economic recovery was "taking hold" growth was likely to be "weak by historical standards."

The bank expects the economy to expand by 0.6% in the current quarter and said that growth will reach an annual rate of 2.6% in two years' time, up from 2.2% in its last report.

Sterling was little changed against the euro, with EUR/GBP edging up 0.01% to 0.8669, after rising to session highs of 0.8731.

In the euro zone, official data showed that German industrial production jumped 2.4% in June, easily surpassing expectations for a 0.3% increase.

The report came one day after stronger-than-forecast German factory orders data reinforced expectations that the euro zone economy is starting to recover.

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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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