Forex Pros – The pound was up against the U.S. dollar on Wednesday, after the Confederation of British Industry raised its inflation forecast and said it was now more likely that the Bank of England would increase interest rates in the second quarter.
GBP/USD hit 1.61 during European morning trade, the daily high; the pair subsequently consolidated at 1.6088, rising 0.12%.
Cable was likely to find support at 1.6027, Tuesday’s low and a one-week low and resistance at 1.6161, Tuesday’s high.
The CBI, the U.K.’s biggest business lobby, said consumer price growth will average 3.9% in 2011, raising its prediction from 3.3% in December. It sees inflation slowing to the bank’s 2% target in 2012.
“Persistently high levels of inflation” make it “more likely that the Bank of England will need to start putting up interest rates,” CBI Chief Economic Adviser Ian McCafferty said.
Also Wednesday, a report by the British Retail Consortium showed U.K. food price inflation accelerated to its fastest pace in 19 months in January.
The pound was also slightly higher against the euro, with EUR/GBP dipping 0.02% to hit 0.8477.
Later in the day, the head of the U.S. Federal Reserve, Ben Bernanke was to testify before the Budget Committee in Washington, while the U.K. was to publish official data on its trade balance.
ForexPros.com
