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GBP/USD Hits 2-Week High on BOE Report

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GBP/USD Hits 2-Week High on BOE Report

The British pound surged to a two-week high versus the dollar amid signs the Bank of England will raise interest rates as early as next year.

The GBPUSD currency pair rose for the third consecutive day, setting a fresh two-week high on a gain of 135 pips. As of 18:45 GMT, the GBPUSD was trading at 1.6584, having surpassed two technical barriers (1.6520 and 1.6561). The next resistance is located at 1.6602. On the downside, technical support is ascending at 1.6339, 1.6380 and 1.6421.

The pair has gained more than 1.5 percent since Friday, as the forex market sizes recovery trends on both sides of the Atlantic. The US labour market added 113,000 jobs last month, well below forecasts. In the UK, meanwhile, labour market prospects will continue to brighten according to the Bank of England, which announced today it believes the unemployment rate will fall to its target threshold by the spring.

UK recovery is expected to broaden this year, the central bank reported today. The BOE unexpectedly raised its economic outlook this year from 2.8 percent to 3.4 percent, as target inflation, good credit conditions and accommodative policy continue to drive UK recovery.

In other trading, the EURGBP pair fell nearly 100 pips to 0.8198, as weaker than forecast Eurozone industrial production weighed on the euro. Industrial output in the euro area fell 0.7 percent in December, official data from the European Commission showed today. Economists forecast a narrower drop in the vicinity of 0.3 percent. Compared to year-ago levels, output rose only 0.5 percent in December, well below forecasts calling for 1.8 percent.

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