Forexpros – The pound erased losses against the U.S. dollar on Thursday, rising to the highest levels of the session after the Bank of England left monetary policy unchanged.
GBP/USD clawed back up from 1.6093, the daily low, to hit 1.6161 during European early afternoon trade, gaining 0.21%.
Cable was likely to find support at 1.6037, the low of April 20 and resistance at 1.6163, the high of April 24.
The BoE kept its benchmark interest rate unchanged at a record low 0.5%, in a widely expected move and announced no change to the size of its asset purchase facility which stands at GBP325 billion, following a GBP50 billion increase in February.
The announcement came after stronger-than-expected U.K. manufacturing production data, which showed the first increase in three months.
The U.K. Office for National Statistics said earlier that manufacturing production rose by 0.9% in March, beating expectations for a 0.5% increase. February’s figure was revised to a 1.1% decline from a previously reported drop of 1.0%.
Meanwhile, investors continued to monitor political developments in Greece, as the debt-laden country struggles to form a coalition government following weekend elections.
The leader of the leftist Syriza party, Alexis Tsipras gave up his attempt to form a new government on Wednesday, putting Greek Socialist leader Evangelos Venizelos in a position to make a last-ditch attempt to form a government on Thursday.
Elsewhere, the pound was also higher against the euro, with EUR/GBP easing down 0.07% to hit 0.8011, re-approaching a three-and-a-half year high.
The single currency came under pressure after the European Central Bank cut its 2012 gross domestic product growth outlook to minus 0.2% from minus 0.1%, in its monthly report published earlier, as downside risks remain to the economic outlook.
Growing concerns over the health of Spain’s banking sector also weighed, after the Bank of Spain received an official request late Wednesday to take a stake in Bankia, the country’s fourth-largest lender.
Later in the day, the U.S. was to release official data on trade balance, followed by government reports on unemployment claims and import prices. Federal Reserve Chairman Ben Bernanke was also due to speak.
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