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Forex - GBP/USD extends gains after BoE holds on policy

Published 09/08/2011, 10:45 AM
Updated 09/08/2011, 10:45 AM

Investing.com – The pound extended gains against the U.S. dollar on Thursday, rising to a two-day high after the Bank of England left its benchmark interest rate unchanged and held off from increasing its asset-buying program.

GBP/USD hit 1.6073 during U.S. morning trade, the pair’s highest since Tuesday; the pair subsequently consolidated at 1.6071, gaining 0.51%.

Cable was likely to find support at 1.5917, Wednesday’s low and resistance at 1.6166, Tuesday’s high.

The BoE said it was maintaining the benchmark interest rate at 0.50%, in a widely expected move. The bank also said it was to maintain the stock of asset purchases financed by the issuance of central bank reserves at GBP200 billion.

The pound fell broadly earlier as a recent string of negative U.K. data, combined with concerns over the outlook for global growth prompted speculation the BoE may resort to quantitative easing to shore up U.K. growth.

Also Thursday, the Labor Department said the number of people who filed for unemployment assistance in the U.S. last week rose unexpectedly to hit 414,000, confounding expectations for a decline to 405,000.

The pound was also higher against the euro, with EUR/GBP tumbling 1.12% to hit 0.8716.

The euro weakened earlier after European Central Bank President Jean-Claude Trichet said the euro zone economy was facing “particularly high uncertainty and intensified downside risks,” after the bank left its benchmark interest rate unchanged at 1.5%.

Meanwhile, investors were looking to a speech by Federal Reserve Chairman Ben Bernanke on the U.S. economic outlook later in the day, while U.S. President Barack Obama was to make a speech to Congress to propose new employment measures.

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