The pair pushed higher against the dollar on Wednesday as investors looked ahead to the outcome of the Federal Reserve’s latest policy setting meeting and U.S. data on fourth quarter growth later in the trading day. GBP/USD hit 1.5792 during European afternoon trade, the pair’s highest since Monday; the pair subsequently consolidated at 1.5780, easing up 0.11%. Cable was likely to find support at 1.5673, Monday’s low and a five-month low and resistance at 1.5826, last Friday’s high. Markets were looking ahead to a series of significant U.S. economic events, including the outcome of the Fed’s policy setting meeting and preliminary data on U.S. fourth quarter gross domestic product. The U.S. central bank was expected to reaffirm its commitment to its easing program until the unemployment rate falls below 6.5%. The U.S. was also to release data on January’s ADP nonfarm payrolls, ahead of Friday’s government data on nonfarm payrolls. Sterling found support after the Bank of England report showed that net lending to individuals in the U.K. rose to GBP1.7 billion last month from a revised GBP0.1 billion in November, the highest level since April. The BoE said the number of final mortgage approvals rose to 56,000 in December from 54,000 in November, above market expectations for a reading of 55,000. The pound remained under pressure after data last week showed that the U.K. economy contracted 0.3% in the fourth quarter, putting Britain on track for a triple-dip recession. The pound was trading close to one-year lows against the broadly stronger euro, with EUR/GBP up 0.29% to 0.8582. Demand for the single currency continued to be underpinned by indications that the worst of the crisis in the euro zone is over. The euro shrugged off data showing that Spain’s economy contracted by 0.7% in the three months to December, bringing the annualized rate of contraction to a larger-than-forecast 1.8%. Elsewhere in the euro zone, Italy saw borrowing costs fall sharply at an auction of five- and 10-year government bonds on Wednesday, with the yield on 10-year bonds falling to 4.17%, the lowest since October 2010.
EasyForexNews Research Team