Forexpros – The pound extended gains against the U.S. dollar on Wednesday, hitting an almost one-month high as risk sentiment was boosted amid growing hopes of progress in tackling the euro zone sovereign debt crisis.
GBP/USD hit 1.5784 during early European afternoon trade, the pair’s highest since September 16; the pair subsequently consolidated at 1.5760, climbing 1.16%.
The pair was likely to find support at 1.5526, the low of October 10 and resistance at 1.5867, the high of September 16.
Earlier in the day, German Chancellor Merkel said she remained certain that plans to expand the powers of the European Financial Stability Facility would be ratified ahead of an EU summit on October 23.
Slovakia’s parliament rejected a plan to enlarge the EFSF on Tuesday, resulting in the collapse of the nation’s government. However, the outgoing government said that a re-vote would go ahead as soon as Wednesday afternoon.
The pound shrugged off data showing that the U.K. unemployment rate rose to an almost 17-year high in September.
The Office for National Statistics said the number of people in the U.K. claiming unemployment benefit rose by 17,500 last month. Analysts had forecast a rise of 24,000.
But the ONS said the unemployment rate ticked up to 8.1% from August, the highest level since October 1996, confounding expectations for the rate to remain unchanged at 7.9%.
The weak data added to concerns over economic conditions in the U.K. after the Bank of England announced last week that it is to restart its asset purchase program, in an attempt to shore up the ailing economy.
Elsewhere, the pound was also higher against the euro with EUR/GBP shedding 0.17%, to trade at 0.8740.
Later in the day, European Commission President Jose Barroso was to present proposals on bank recapitalization to the European Parliament. The U.S. was to publish the minutes of the Federal Reserve’s most recent policy-setting meeting.
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