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Forex - GBP/USD trims losses but remains under pressure

Published 07/23/2014, 10:13 AM
Updated 07/23/2014, 10:13 AM
Pound remains under pressure vs. dollar

Pound remains under pressure vs. dollar

Investing.com - The pound trimmed losses against the U.S. dollar on Wednesday, but remained near three-week lows as events in Ukraine and the Gaza Strip continued to dominate investors' attention.

GBP/USD pulled away from 1.7024, the pair's lowest since June 30to hit 1.7050 during U.S. morning trade, still down 0.09%.

Cable was likely to find support at 1.7009, the low of June 30 and resistance at 1.7100, the high of July 21.

Investors remained cautious after the European Union threatened Russia on Tuesday with harsher sanctions over Ukraine, while fighting in the Gaza Strip continued.

Earlier Wednesday, the minutes of the Bank of England’s June meeting showed that the decision on whether to raise interest rates has become more balanced for some policymakers in recent months than earlier in the year.

However, the minutes also said weakness in wage growth is becoming more “striking”, particularly given that the annual rate of inflation rose to 1.9% in June. Weak wage growth in the face of strong employment growth made it difficult to gauge the degree of slack in the labor market, the minutes said.

Some members of the monetary policy committee were concerned that raising rates too early could destabilize the recovery, given recent signs of weakness in the global economic recovery.

Separately, a report showed that mortgage approvals in the U.K. rose broadly in line with expectations in June.

The British Banker's Association reported that the number of new mortgages approved increased to 43,300 last month from May’s revised total of 41,900, just below forecasts of 43,400.

The pound has strengthened broadly this year, rising to almost six-year highs against the dollar earlier this month amid expectations that the deepening recovery in the U.K. will prompt the BoE to raise rates before the end of 2014.

Sterling was also lower against the euro, with EUR/GBP adding 0.11% to 0.7900.

The single currency has come under pressure since the European Central Bank cut rates to record lows on June 5, in a bid to stave off the threat of deflation in the euro area.

Recent comments by ECB President Mario Draghi were seen as the latest sign that the bank is open to further monetary easing measures to help shore up the faltering recovery in the region.

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