Forex Pros – The euro extended gains against the pound on Wednesday, after the Bank of England indicated that it did not intend to raise interest rates as rapidly as market participants had previously expected.
EUR/GBP hit 0.843 during European morning trade, the daily high; the pair subsequently consolidated at 0.8425, surging 0.74%.
The pair was likely to find support at 0.8354, Tuesday’s low and a three-week low and resistance at 0.8476, the high of February 11.
In its quarterly inflation report, the BOE raised its forecasts for inflation for 2011 but said economic growth would be slower, weighed by higher commodity prices and government budget cuts.
However policymakers acknowledged that the bank needed to raise its benchmark interest rate to combat the impact of high inflation on consumer spending.
“Inflation is likely to pick up to between 4% and 5% in the near term and to remain well above the 2% target over the next year or so,” the bank said.
The euro was also up against the U.S. dollar, with EUR/USD climbing 0.28% to hit 1.3522.
Also Wednesday, official data showed that the number of people claiming unemployment benefits in the U.K. rose unexpectedly in January.
ForexPros.com
