COZfx: GBP/USD higher on BoE report & UK data

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COZforex: The pound remained higher against the US dollar on Wednesday, still supported after the Bank of England brought forward the date it expects the unemployment rate to hit the 7% threshold at which it will consider raising rates and revised up its forecast for growth.

GBP/USD hit 1.6002 amid US morning trade, the pair's highest since Monday; the pair subsequently consolidated at 1.5981, gaining 0.48%. COZFX strategist Nigel Boynton said, GBP/USD is predicted to find support at 1.5835, and a decline through could take it to the next support line of 1.5775. Meanwhile, the pair is predicted to find its first resistance at 1.5974, and a rise through could take it to the next resistance line of 1.6053.

The pound remained near session highs against the dollar after the BoE’s quarterly inflation report earlier said the unemployment rate will fall faster than it expected three months ago. BoE Governor Mark Carney said there is a "two in five chance" that it could be 7% at the end of 2014. The bank reiterated that the unemployment rate falling below 7% would not automatically trigger an increase in interest rates.

The BoE said it now expects economic growth of 1.6% this year, up from 1.4% in August and growth of 2.8% in 2014, up from 2.5%. The bank still expects growth of 2.3% in 2015.

The bank said inflation declines back in the 4 months to October by more than expected at the time of the August report. The near-term outlook for inflation is lower than expected three months ago and inflation is likely to drop a little further during 2014, helped by the recent appreciation in sterling.

Data released on Tuesday showed that the annual rate of inflation in the UK slowed to 2.2% in October, the lowest since September 2012, from 2.7% the previous month. Economists had expected the inflation rate to slow to 2.5%.

Separately, the Office for National Statistics on Wednesday said that the number of people claiming unemployment benefits in the UK declines by 41,700 in October, better than expectations for a decline of 35,000 people. September’s figure was revised to a decline of 44,700 people from a previously reported decline of 41,700.

The rate of unemployment ticked down to 7.6% in the 3 months to September the ONS said. Economists had expected the unemployment rate to remain unchanged at 7.7%.

(COZ forex UK)