GBP/USD sharply up after recent UK data, BoE minutes

British pound trimmed earlier losses against the US dollar on Wednesday, following Bank of England minutes and the upbeat jobless claims report from the United Kingdom.

GBP/USD suddenly rose to a session high at 1.5245 at 8:32 GMT, after which consolidation followed at 1.5191, up by 0.18% for the day. Support was likely to be found at July 16th low, 1.5043, while resistance was to be encountered at July 4th high, 1.5287.

Earlier today it became clear that all 9 members of Bank of Englands Monetary Policy Committee voted unanimously in favor of preserving the current size of monetary stimulus, according to the minutes from the central banks meeting in July. This result was not in consonance with the recent discrepancies in members view, regarding financial stimulus necessity. At this first meeting under the leadership of new Governor Mark Carney it was decided that the base interest rate should be kept unchanged at 0.50%. However, some policymakers still saw the need of stimulus, as they were curious what other measures to support economic growth were available beside asset purchases. Others suggested there was not that crucial need of stimulus in the future, taking into account current economic development and prospects it would keep up the pace during the coming months.

Additionally, the Office for National Statistics reported that the number of people, who filed for unemployment assistance decreased at the most considerable pace in three years in June, as the increase in average earnings including bonuses was still not sufficient in order to ease the pressure on consumer expenditures, which are the main driving force of the economy. Total claimant count dropped by 21 200 in June, the largest decrease since June 2010 and significantly outstripping initial estimates of a drop by 8 000. Claimant count rate decreased to 4.4% in June from 4.5% in May. At the same time, the International Labour Organization (ILO) said that UK Unemployment Rate remained stable at 7.8% during the three months until May in line with expectations and confirming the results during the preceding period.

Another report said that Average Earnings including Bonuses in the United Kingdom rose by 1.7% during the three months until May, above the expected 1.4% rate of increase, while during the previous period earnings were 1.3% higher. As consumer inflation rate increased at a greater extent in comparison with that of the average earnings in the country, the pressure on consumer expenditures could dampen the above mentioned positive results, regarding UK labor market.

However, sterling’s gains were limited ahead of the highly anticipated testimony on monetary policy by Federal Reserve Chairman Ben Bernanke later in the trading day amid speculation over the timing of a possible scale back to the central banks bond buying program.

Elsewhere, the pound traded higher against the euro and the Japanese yen, with EUR/GBP cross down by 0.37% to 0.8651, while GBP/JPY pair dropped by 0.88% to 151.45.