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Forex - Sterling falls to 10-week lows vs. dollar

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Investing.com -

Investing.com - The pound fell to ten-week lows against the dollar on Wednesday after the Bank of England cut its forecast for U.K. wage growth and said the pace of pay growth would be a key factor in determining how quickly interest rates will rise.

GBP/USD fell to session lows of 1.6719, the weakest since June 4, from around 1.6802 earlier.

Cable was likely to find support at around the 1.6690 level and resistance at around 1.6815.

The drop in sterling came after the BoE cut halved its forecast for wage growth in 2014, cutting it to 1.25% from 2.5% previously. It sees pay growth picking up to 3.25% in 2015, and more strongly in 2016.

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

The pound had edged lower earlier in the session after the latest U.K. employment report showed that wage growth contracted in the three months to June.

The Office of National Statistics reported that average earnings, excluding bonuses, rose by just 0.6% in the three months to June. Including bonuses, pay packets contracted by 0.2% during the quarter, the first decrease since 2009.

The U.K. unemployment rate fell to 6.4% in the quarter, in line with expectations and down from 6.5% in May.

The number of people claiming unemployment benefits fell by 33,600 last month, beating expectations for a decline of 30,000. June's figure was revised to a drop of 39,500 from 36,300 previously.

The pound was also weaker against the euro, with EUR/GBP advancing 0.39% to 0.7982 from 0.7944 earlier in the session.

In the euro zone, data on Wednesday showing that industrial production fell unexpectedly in June added to concerns that the recovery in the region is faltering.

The euro zone was to publish data on economic growth and inflation on Thursday, amid expectations for weak readings. Weak data would add to pressure on the European Central Bank to implement fresh measures to shore up the recovery after it cut rates to record lows in June.

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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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