Forex Pros – The pound edged higher against the U.S. dollar on Wednesday, rising to a daily high ahead of the Bank of England’s quarterly inflation report later in the day.
GBP/USD hit 1.6412 during European morning trade, the daily high; the pair subsequently consolidated at 1.6397, gaining 0.19%.
Cable was likely to find short-term support at 1.6269, Monday’s low and a three-week low and resistance at 1.6543, the high of May 5.
The inflation report appeared likely to forecast higher inflation in the short run with Governor Mervyn King expected to defend his decision to keep interest rates at a record low of 0.5%.
Recent weak U.K. data has highlighted concerns over the uneven nature of the economic recovery, with the economy facing public spending cuts and weak consumer confidence, both of which have kept the BoE from raising interest rates despite above-target inflation.
However, data on Tuesday showed British retail sales rose by 5.2% in April, their fastest annual pace in five years.
The pound was also higher against the euro, with EUR/GBP shedding 0.35% to hit 0.8772.
Also Wednesday, the U.K. was to publish official data on its trade balance. The U.S. was also to publish data on its trade balance as well as government data on crude oil inventories and the federal budget balance.
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