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Forex - GBP/USD holds gains, near 8-month highs

ForexSep 18, 2013 10:19AM ET
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Investing.com - The pound held gains against the U.S. dollar on Wednesday, trading near eight-month highs as the minutes of the Bank of England's most recent policy meeting continued to support demand for sterling, while markets eyed the Federal Reserve's upcoming policy statement.

GBP/USD hit 1.5980 during U.S. morning trade, the highest since January 18; the pair subsequently consolidated at 1.5962, gaining 0.36%.

Cable was likely to find support at 1.5884, Tuesday’s low and resistance at 1.6038, the high of January 17.

The minutes of the BoE’s September meeting showed that policymakers voted unanimously in favor of keeping the benchmark interest rate on hold at 0.5% and the size of the bank’s asset purchase facility unchanged at GBP375 billion.

The minutes also indicated that policymakers believe the economic recovery in the U.K. is taking hold and outlined signs of a recovery in the euro zone.

"Over the month the evidence was consistent with a recovery at least as strong as that expected at the time of the August Inflation Report," the minutes said.

The minutes also reiterated the bank's forward guidance that it will not automatically raise interest rates when the U.K. unemployment rate falls below 7%.

In the U.S., official data earlier showed that building permits fell by 3.8% to a seasonally adjusted annual rate of 918,000 units in August, from 954,000 the previous month. Analysts had expected building permits to fall by 0.4% to 950,000 units last month.

The report also showed that U.S. housing starts rose 0.9% to a seasonally adjusted rate of 891,000 units last month, from a downwardly revised 883,000 units in July, compared to expectations for a 3% increase to 917,000 units.

The data came as investors were eyeing the outcome of the Fed’s two-day policy meeting, due to conclude later Wednesday. The central bank was expected to announce plans to start tapering its USD85 billion-a-month asset purchase program.

Sterling was also higher against the euro with EUR/GBP shedding 0.44%, to hit 0.8361.

Forex - GBP/USD holds gains, near 8-month highs

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