Forex - GBP/USD edges higher but gains seen limited

The pound was higher against the U.S. dollar on Wednesday, but gains were expected to remain limited as the release of strong U.S. durable goods orders data supported demand for the greenback.

Pound rises against dollar but gains capped

GBP/USD hit 1.6568 during U.S. morning trade, the pair's highest since March 20; the pair subsequently consolidated at 1.6565, adding 0.23%.

Cable was likely to find support at 1.6482, the low of March 25 and resistance at 1.6654, the high of March 19.

The greenback found support after the Commerce Department reported that U.S. durable goods orders rose 2.2% last month, snapping two months of declines and surpassing expectations for a 1% increase.

Core durable goods orders, which exclude transportation items, inched up 0.2%, slightly below forecasts for a 0.3% gain.

The data indicated that economy is gaining momentum in the wake of a weather induced slowdown.

Sterling was higher against the euro, with EUR/GBP retreating 0.44% to 0.8327.

Sentiment on the single currency remained fragile after European Central Bank officials indicated Tuesday that the bank is considering policy options to stave off the risk of deflation in the region.

The single currency fell against the dollar after ECB governing council member Jens Weidmann said a negative deposit rate could be an appropriate way to address the impact of strong gains in the euro.

He also said it was not out of the question for the ECB to buy loans or other assets from banks to fight deflation.

The euro later bounced off lows after Weidmann said the current euro exchange rate does not call for policy action.