The pound rose against the US dollar after Bank of England released its December 5th policy meeting minutes. The British currency was also supported by a report by the UK National Statistics, which revealed that the unemployment rate reached a 4-year low in the three months through October.
Having hit a session high at 1.6365 at 09:43 GMT, GBP/USD traded at 1.6354 at 12:21 GMT, gaining 0.55% for the day. The pair touched 1.6466 on December 10th, the pairs highest point since August 29th. Support was likely to be received at December 17th high, 1.6220, while resistance was to be encountered at December 12th high, 1.6418.
The UK National Statistics Office reported the unemployment rate dropped to 7.4% in the three months through October, the lowest since June 2009, beating analysts projections of a reading of 7.6%. A separate report showed that the jobless claims fell 36 700 in November, while projections pointed to a 35 000 decline. In October claims for unemployment benefits dropped 41 700.
The pound was supported by the minutes of the Bank Of England, which revealed that the Monetary Policy Committee, which consists of 9 members, including the central banks Governor, decided unanimously to keep the main interest rate at 0.5% and leave the asset-purchases at 375 billion pounds on their December 5th policy meeting.
The BoE, kept its benchmark interest rate at a record-low 0.5% and left its asset-purchases target unchanged at 375 billion pounds on December 5th. The BoJ policy makers have pledged to keep borrowing costs low until unemployment reaches 7% and the economy stabilizes enough to withstand higher interest rates.
“The recovery has some way to run before it would be appropriate to consider adjusting the exceptional level of monetary stimulus. It is welcome that the economy is growing again, but a return to growth is not yet a return to normality, said yesterday the BoEs Governor Mark Carney to lawmakers at the House of Lords Economic Affairs Committee in London, cited by Bloomberg.
Meanwhile, the Federal Open Market Committee concludes a two-day meeting later today.
Although a recent series of upbeat US data, including retail sales, industrial production, unemployment and third quarter growth, raised bets the Federal Reserve might trim its monthly bond purchases in December, the majority of economists haven’t shifted their expectations that the central bank will wait most likely until March.
Also supporting that view, the Department of Labor reported yesterday that consumer inflation in the US remained benign and well below Fed’s official target of 2%, leaving enough room for eased money supply. The consumer price index (CPI) rose to 1.2% in November, compared to a year ago, short of analysts’ estimates of a rate of 1.3%. In October, consumer prices reached 1.0%. Month-to-month, consumer inflation was flat, compared to October’s 0.1% decline and short of analysts’ projections of an increase by 0.1%.
Consumer prices, excluding food and energy costs, or core consumer prices, increased to 1.7% in November from a year ago, the same as in October and in line with expectations. Month-to-month, Core CPI rose by 0.2% in November from 0.1% in October. Analysts’ forecasts pointed to a 0.1% gain. The Federal Reserve regards that core prices can be a better gauge of longer-term inflationary pressure, because they exclude the volatile food and energy categories.
The Federal Reserve may begin to scale back its $85 billion in monthly asset purchases at the committee’s policy meeting on December 17th-18th rather than wait until January or March, according to 34% of economists who participated in a Bloomberg survey on December 6th. In November’s survey, 17% of respondents projected a tapering in December.
Elsewhere, having reached a session high at 103.03 at 02:35 GMT, USD/JPY traded at 102.95 at 08:26 GMT, gaining 0.27% for the day. The pair reached 103.92 on December 13th, the highest level since October 2008. Support was likely to be received at December 17th low, 102.50, while resistance was to be encountered at December 17th high, 103.11.
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
