Forex Pros – The pound erased gains against the U.S. dollar on Wednesday, falling to a daily low after the Bank of England cut its economic growth forecast in its quarterly inflation report even as it saw inflation accelerating.
GBP/USD fell from 1.6186, the daily high, to hit 1.6057 during European morning trade, shedding 0.42%.
Cable was likely to find support at 1.5962, the low of February 11 and resistance at 1.6182, the day’s high.
The central bank’s February Inflation Report showed consumer price inflation spiking up to between 4% and 5% in the middle of this year before falling back to around 1.7% in early 2013, a higher forecast than in November.
However, the banks forecast for growth in 2011 was lower than in its November quarterly report, but growth was seen picking up to around 3% in the medium term.
“Expansionary monetary policy, combined with further growth in global demand and the past deprecation of sterling should ensure that the recovery in the UK is maintained,” the BoE said.
The pound was also sharply lower against the euro, with EUR/GBP soaring 0.72% to hit 0.8423.
Also Wednesday, official data showed that the number of people claiming unemployment benefits in the U.K. rose unexpectedly in January.
ForexPros.com
