The pair was trading close to six-month lows on Thursday after the Bank of England cut its outlook for growth on Wednesday and said inflation would remain above target until early 2016. GBP/USD hit 1.5492 during European morning trade, the pair’s lowest since August 2; the pair subsequently consolidated at 1.5512, shedding 0.18%. Cable was likely to find support at 1.5412, the low of July 13 and resistance at 1.5541, the session high. In its quarterly inflation report on Wednesday, the BoE said inflation is likely to be at around 2.3% in two years’ time, sharply higher than the 1.8% forecast in November, before falling back below the bank’s 2% target in the first quarter of 2016. The central bank said the economy will experience a “slow but sustained recovery” over the next three years and reiterated that it stood ready to provide more stimulus as needed. Elsewhere, the pound pushed higher against the euro, with EUR/GBP down 0.66% to 0.8598. The euro weakened broadly after official data showed that the recession in the euro zone deepened in the fourth quarter, with gross domestic product contracting 0.6%, compared to expectations for a 0.4% decline, after a 0.1% contraction in the third quarter.
EasyForexNews Research Team