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GBP/USD Strengthens after Rocky Session

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GBP/USD Strengthens after Rocky Session

The GBPUSD pair was higher Wednesday, after conflicting UK employment numbers kept the pair subdued for much of the European session.

The GBPUSD rose to a daily high of 1.6734. As of 17:00 GMT, the pair was trading at 1.6716, a gain of 36 pips. The outlook is moderately bullish, as the pair looks to test 1.6752. On the downside, technical support is ascending at 1.6622, 1.6580 and 1.6539.

Forex traders looking to bid up the British pound paused for a moment of reflection today, after it was revealed UK unemployment rose in December for the first time in nearly one year. The unemployment rate unexpectedly rose from 7.1 percent to 7.2 percent between October and December, the Office for National Statistics reported today. The same report also showed jobless claims declined 27,600 in January, painting a mixed picture of the labour market.

With rate hike expectations subdued for the time being, the forex market will look to the Bank of England to manage expectations about monetary policy. The central bank effectively abandoned its original rate guidance strategy last week, opting instead to look at a more balanced measure of slack in the economy.

In the US, economic news mostly disappointed the markets. US housing starts declined at an annual rate of 16 percent in January, while building permits fell 5.4 percent.

In other trading, the EURGBP pair declined 16 pips to 0.8233, after having traded within a narrow range for most of the day. Eurozone construction output declined 0.2 percent annually in December, the European Commission reported today. The Commission is expected to report on consumer confidence Thursday, followed by its latest growth forecast Friday.

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