GBP/USD hits fresh 8-month highs after BoE minutes, Fed ahead

The pound rose to fresh eight-month highs against the dollar on Wednesday after the latest Bank of England minutes showed that no policymakers believed more stimulus is necessary at present, while investors awaited the outcome of this week’s Federal Reserve meeting later in the trading day.

GBP/USD hit 1.5963 during European morning trade, the highest since January 18; the pair subsequently consolidated at 1.5961, gaining 0.36%.

Cable was likely to find support at 1.5884, Tuesday’s low and resistance at 1.6038, the high of January 17.

The minutes of the BoE’s September meeting showed that policymakers voted unanimously in favor of keeping the benchmark interest rate on hold at 0.5% and the size of the bank’s asset purchase facility unchanged at GBP375 billion.

The minutes also indicated that policymakers believe the economic recovery in the U.K. is taking hold and outlined signs of a recovery in the euro zone.

Over the month the evidence was consistent with a recovery at least as strong as that expected at the time of the August Inflation Report," the minutes said. 

The minutes also reiterated its forward guidance that it will not automatically raise interest rates when the U.K. unemployment rate falls below 7%.

Investors were looking ahead to the outcome of the Fed’s two-day policy meeting, due to conclude later Wednesday, amid expectations that the bank would announce plans to start reducing its USD85 billion-a-month asset purchase program.

The dollar remained under pressure after a recent series of soft economic data, including the latest U.S. jobs report, saw investors reassess expectations over how much the Fed will cut its stimulus program.

Sterling was trading close to eight-month highs against the euro, withEUR/GBP down 0.43% to 0.8362.

The U.S. was to release data on building permits and housing starts later Wednesday, ahead of the Fed policy announcement.