Forexpros – The pound edged higher against the U.S. dollar on Thursday, as prospects for further monetary easing by China supported sentiment, but gains looked likely to remain limited after the Bank of England slashed growth forecasts on Wednesday.

GBP/USD hit 1.5682, the pair’s highest since Tuesday; the pair subsequently consolidated at 1.5668, easing up 0.09%.

Cable was likely to find support at 1.5563, Tuesday’s low and resistance at 1.5729, the high of July 31.

Earlier Thursday, official data showed that China’s consumer price index rose at an annualized rate of 1.8% in July, slower than the 2.2% rate of the previous month, indicating that China’s central bank has more scope for monetary easing, following interest rates cuts in June and July.

Markets were also supported by expectations that the European Central Bank will act next month to lower high Spanish and Italian borrowing costs.

But sentiment on the pound remained fragile after the BoE said Wednesday that the U.K. economy would barely grow this year and cut its growth forecasts for the coming years in its quarterly inflation report.

The pound moved higher Wednesday after BoE Governor Mervyn King indicated that a rate cut was unlikely in the coming months, saying it would be counterproductive.

Sterling was slightly higher against the euro, with EUR/GBP slipping 0.13% to 0.7886.

Later in the day, the U.K. and the U.S. were both to publish official data on the trade balance, while the U.S. was also to release a weekly report on initial jobless claims.

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